FCC Closes Phone Unlock Loophole Fuelling Fraud

The Federal Communications Commission has enacted a significant revision to a long-standing rule that previously required Verizon Communications to unlock its mobile phones 60 days post-activation. This adjustment comes after Verizon reported substantial annual losses, amounting to hundreds of millions of dollars, due to widespread fraud. The company argued that this early unlocking policy was being exploited by criminal networks.

Verizon stated that the unlocked handsets were frequently stolen and resold on the dark web, with particular destinations including Russia, China, and Cuba. This fraudulent activity has been a growing concern, with Verizon estimating the loss of over 784,000 devices to fraud in 2023 alone. The telecommunications giant sought this rule change last year to combat these escalating issues.

Previously, wireless carriers had agreed to unlock postpaid phones once fully paid and prepaid phones within one year of activation. Verizon was the sole major provider subject to the earlier 60-day unlocking requirement. FCC Chair Brendan Carr highlighted that these handset unlocking policies had been exploited for criminal acts, including drug running and human smuggling, underscoring the necessity of the revised rule.