Councilman looks to ban cash-for-phones ATMs
Published: June 12, 2013
Baltimore City would effectively ban machines that spit out cash for used electronics under a bill City Councilman Bill Henry (D-4th District) proposed on June 3. But the company whose machines would be banned says lawmakers should consider the alternatives.
“I would not say that the companies do not have good intentions,” Henry says. “But if you Google ‘ecoATM,’” you find stories from several cities where stolen phones are getting into the machines.
This is true. But the stories often depict people getting their stolen phones back, something that doesn’t often happen when stolen electronics are sold on craigslist or through a storefront. “There was a cellphone-theft problem in Baltimore before we came along,” ecoATM spokesperson Ryan Kuder says. “Those phones were being sold somewhere. Where?”
EcoATM, a five-year-old startup based in San Diego, built the machines that examine mobile devices and other electronics and offer cash on the spot (for newer models in good shape). The company has raised more than $70 million from equity investors and lenders to expand its reach nationally. The market for old phones, iPods, and such stuff is robust, estimated in a 2011 Wall Street Journal article at a few hundred million handsets. EcoATM founder Mark Bowles said he and his partners wanted to solve the problem of people keeping old electronics—with their toxic batteries and other parts—in desk drawers for years and then tossing them in the trash.
Some existing buy-back programs require consumers to ship their phones and wait for their money, maybe to be deposited into a PayPal account. Some programs offered store credit only. EcoATM’s robotic point-of-sale system gained instant fascination when it was tested in Nebraska in 2009.
The company built safeguards into its machines, taking photos of the seller, his or her driver’s license, and a thumbprint if required by local pawnshop regulations. Serial numbers are checked against a database of stolen phones and every phone is kept for 30 days, the company says. And if the phone is reported stolen after ecoATM buys it, the company returns it.
“The rate we find phones reported to us either lost or stolen is 5 in 10,000,” Kuder says. “And when we find them, we return them at our expense. It’s a serious disincentive for us to take stolen phones.”
Still, police in several jurisdictions expressed concern, and no one came out against the machines with more ferocity than Washington D.C. Metropolitan Police Department Chief Cathy Lanier. Radio Station WTOP reported that in February she said that 30 to 35 percent of the phones in the machines were stolen. This was an exaggeration. On the show, the chief said only that “many” are stolen and that it’s a problem. Police in D.C. have tracked about 200 stolen phones to ecoATMs in surrounding suburbs and, as of last week, had made at least six arrests in those cases.
Baltimore’s only ecoATM was removed from the Mondawmin Mall in December of 2012. Henry told council members that city police had asked the mall to get rid of it; Baltimore Police spokesperson Anthony Guglielmi says there was no order to remove the machine (“They made that decision and we supported it,” he says) and little evidence that it was collecting stolen phones or driving cellphone thefts in the city. Kuder says the problem was large crowds, not stolen phones. Yet the idea that the kiosks are a problem persists.
“We believe anecdotally that when people commit cellphone robberies, people go to these machines and turn it in for money,” Guglielmi says, adding that “the company is good at giving us information about who is selling the phones. . . they gave us a printout and there was a guy who went to the machine once a week. Either he’s going through a lot of phones or . . .”
Guglielmi said ecoATM’s executive met recently with Baltimore Police Commissioner Anthony Batts and will continue a dialogue.
Henry says the machines offer an easy path for thieves. “Even if you use your own [thumb] print, there’s no way to prosecute,” he says, because the person selling the phone is not necessarily the person who stole it. Or, he says, “you pay a kid in the mall $5 to put his thumb there.” In one case he learned of, Henry says, the ecoATM camera could not tell the difference between a driver’s license and a photocopy. “If they were serious, they would mail a check to the address on the ID,” Henry says of the company. “The fact that they’re willing to give cash at the point of sale says to me they’re more interested in getting the phone and not curbing the culture that we already have.”
Henry says he wants to get Anne Arundel and Baltimore County to ban the machines as well, so that thieves don’t have any access to them. He’s spoken to County Councilman David Marks about moving a bill there: “By putting the city [bill] in, I’m making it easier for David to put one in on the county.”
Marks says he has not yet done any work on it, citing the budget season. There are eight machines in county malls, including two each at White Marsh and Security Square, according to the ecoATM website. Police in Baltimore County say they have not seen a problem with them. “We have one incident in which a phone was taken and our patrol officers were able to work with ecoATM security to recover the phone,” Baltimore County Police Spokesperson Cathy Batton says.
Lanier has made a crusade of ridding the D.C. suburbs of the machines, even though there are none in the district itself. “It’s an active campaign,” Kuder says. “We’re frankly befuddled and disheartened by it. The nearest one is an hour and a half by metro and bus.”
Kuder says his company has returned 30 phones in the D.C. area and helped with six criminal prosecutions that he knows of. He says ecoATM could help police in Baltimore as well, if the company is allowed to keep its machines running here. “We appreciate the council’s concern for the citizens of Baltimore,” he says. “We believe that by using data and technology, we can provide both deterrent and prosecution” evidence.
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