As cell phone robberies have soared nationwide, phone companies have found a lucrative side business offering insurance to customers who are anxious their devices may be lost or stolen.
The top four wireless carriers will earn more than $7.8 billion this year in insurance premiums from their customers, according to an estimate by Warranty Week, an industry trade publication. Asurion, a phone insurance company that pays the wireless carriers for each policy they sell, made an estimated $98 million in profit in 2010, according to Businessweek.
“If you do the math, the phone companies are making out like bandits,” said Richard Doherty, a director for Envisioneering Group, a market research firm.
Now, a top prosecutor is claiming that phone companies looking to preserve their profits from selling phone insurance are standing in the way of a solution that could protect consumers from violent robberies.
San Francisco District Attorney George Gascón said Tuesday that he had obtained emails showing how phone companies are blocking the introduction of a so-called kill switch that would render phones inoperable if stolen. The feature could undercut the value of gadgets now trading on a global black market, leading to a sharp reduction in thefts.
“These emails suggest that the carriers are rejecting a technological solution so they can continue to shake down their customers for billions of dollars in insurance premiums,” Gascón said in a statement. “I’m incensed. … This is a solution that has the potential to end the victimization of their customers.”
Read more at Huffington Post.