Verizon has secured approval from the Federal Communications Commission to temporarily lock all new phones for 60 days after purchase to help fight identity theft and handset-related fraud.
The commission on Tuesday granted Verizon’s request for a partial waiver from so called C-block rules that were put in place in 2007 and prohibit licensees from disabling phone features including handset locking, which prevents consumers from using a device on other providers’ networks.
Version is required to automatically unlock the handsets after the 60-day period, regardless of whether the customer requests it, or whether the device is fully paid off, according to the order.
“Today, we thank the FCC for its action to help combat fraud and identity theft by approving our request for a temporary lock on all new phones,” said Verizon EVP and group CEO of Verizon Consumer Group Ronan Dunne in a statement. “This is a win for consumers and small businesses and a strong message to identity thieves, fraudsters, and criminals who are looking to steal phones and customer information.”
Dunne indicated Verizon will implement the 60-day lock “very soon.”
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As a licensee of the 700 MHz C block, Verizon is the only major carrier subject to the C-block rules because of the spectrum it initially used for LTE services, and was the only large carrier selling unlocked phones at the time of purchase.
Verizon filed its petition with the FCC in February, seeking a declaratory ruling that the handset unlocking rule already allows for a temporary lock period (which the FCC denied), or alternatively a limited waiver. The agency agreed with Verizon’s stance that the carrier’s practice of selling unlocked phones at the time of purchase facilitated and maybe even encouraged fraud.
Locked devices are not as valuable on the black market, so the waiver will help reduce the incentive for theft and fraud, according to the FCC.
Verizon argued the 60-day safety check period is necessary to combat increasing incidents of device and identity theft, which have negatively impacted both the carrier and its customers.
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According to Verizon, the number of customers adversely impacted by identity theft on average per month increased 46% from 4,800 in 2017 to 7,000 per month in 2018. The problem is also having a financial impact, with Verizon indicating handset fraud cost the company about $190 million in 2018 and the carrier lost nearly 210,000 devices. Verizon argued that the trends continue, with handset fraud costing the company $34 million in January of this year, a 93% jump from January 2018.
The FCC found the waiver won’t have a significant impact on legitimate customers, as Verizon indicated only a “tiny fraction” of its customers change carriers within the first 60 days of service.
T-Mobile had asserted that granting Verizon relief would “eviscerate” the unlocking rule and require a rulemaking proceeding, but the FCC rejected that argument noting the unlocking rule is still fully in place except for the permitted narrow time-limited locking.
The FCC said it also was not convinced by arguments made by the Rural Wireless Association and Pine Belt that granting Verizon’s waiver request would hurt rural consumers and carriers as they try to compete with larger operators.
Major carriers T-Mobile, AT&T and Sprint all have policies in place to unlock phones when customers request it, but all keep phones locked for a certain period and require the device be paid off in full. T-Mobile requires that a device be active on its network for at least 40 days in order to unlock, AT&T customers need 60 days of active service, and Sprint has a minimum of 50 days.