FCC Changes Verizon Unlocking Rules Following Fraud Concerns

• Verizon lost an estimated 784,703 devices to fraud in 2023 alone, costing hundreds of millions of dollars
• The 60-day unlock requirement was unique to Verizon and shorter than the industry standard of unlocking postpaid phones after full payment or prepaid phones after one year
• Fraud spiked approximately 55% when TracFone moved from a one-year lock to Verizon's 60-day lock following FCC approval of their transaction

FCC Revises Verizon Phone Unlocking Rules to Combat Fraud

The Federal Communications Commission has modified a regulation requiring Verizon Communications to unlock mobile phones 60 days after activation, citing significant financial losses from criminal exploitation. The change aims to close loopholes used by sophisticated criminal networks engaging in device theft and trafficking.

Key Financial Impact:

Verizon reported losing approximately 784,703 devices to fraud in 2023 across prepaid and postpaid services, costing the company hundreds of millions of dollars annually. The carrier experienced a 55% spike in fraud after TracFone adopted Verizon's 60-day unlock policy following their merger approval.

Regulatory Context:

Verizon was the only major U.S. carrier required to unlock phones after just 60 days—significantly shorter than industry standard practices. Other wireless carriers unlock postpaid phones after full payment and prepaid devices no later than one year after activation. The FCC's long-standing Verizon-specific rule created a vulnerability that criminals exploited systematically.

Criminal Activity:

Stolen unlocked Verizon handsets are resold at premium prices on the dark web, particularly in Russia, China, and Cuba. FCC Chair Brendan Carr stated that criminal networks have leveraged the unlocking policy to facilitate serious crimes including drug trafficking and human smuggling.

Market Implications:

The regulatory change aligns Verizon's unlocking requirements with industry standards, potentially reducing fraud-related losses and improving operational margins. This decision addresses a competitive disadvantage unique to Verizon while enhancing security across the telecommunications sector. The move may set precedent for tighter device security regulations across wireless carriers and reduce organized criminal access to premium mobile devices through legitimate channels.