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Opinion: Why Won’t Wireless Companies Help Stop Cell Phone Thefts

Again, the Europeans are ahead of US companies in protecting consumers. Years ago, after observing the increase in online banking fraud and identity theft, many European banks implemented various methods to reduce online banking fraud. For example, European online bank INGDirect (now owned by Capital One) implemented a web-based soft key pad anti-key logging method as part of the account login process. Barclay’s bank implemented PINsentry, a device to generate a random password to increase online banking security. In addition, European banks have used a number of methods to increase credit card security, while their American counterparts have not.

Most American banks do not perceive the additional security measures many European banks have taken to be cost effective. Therefore they have not incorporated many of these methods into their security process. For them, it is more cost effective to write-off the loss and return the money to their customers. Write-offs may be what are best for the bank, but what effect does this have on their customers? Often times, this leaves customers feeling violated and frustrated as they wait for an investigation and reimbursements.

Well, American cell phone carriers may have taken a page from their American banking counterparts as they have decided it is more cost effective NOT to implement additional security methods that can help consumers. According to an NBC News report, smart phone theft is on the rise, and the confrontations are continuing to get more and more violent. According to the report, thieves are stealing smart phones and reselling them. These phones are being reactivated and sometimes being reactivated with the very cell phone carrier as the carrier of the true owner, even though they have been reported as stolen. A number of big city police chiefs have indicated that the theft and violence can be reduced if the cell phone carriers form a comprehensive database of reported stolen cell phones and prevent those phones from being reactivated, similar to what many cell phone carriers in Europe have already done. This action has reduced cell phone theft in European countries. Despite this fact, American cell carriers still refuse to implement the system.

Why would US cell carriers choose not to implement the system? In my opinion, they do not perceive the database to be cost effective, and additionally, as was indicated in the NBC News report, the lack of business they are getting from new customers would reduce their profits. When the phones are reactivated, the cell carriers now have an additional customer they may not have had before and/or now have a customer using a smart phone and using additional services.

In a capitalist market, until consumers complain enough or boycott there will most likely be no change. In this case, unless cell phone carriers receive complaints or experience customers going to other carriers, they will not perceive the necessary actions to reduce sell phone theft as cost effective. If we want action, we have to let cell phone carriers know that our safety should be their concern as well. Recently, the complaining consumers were successful at getting banks to abandon plans of implementing extra bank fees, and cell phone consumers can do the same if they complain enough.

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