Anti-fraud checklist

Phone fraud is the #1 cause of new-reseller insolvency. A single $400 stolen iPhone you can't resell can erase a month's margin. The good news: 90% of fraud vectors are catchable with 5 minutes of inspection. The 12 vectors and how to screen each.

The 12 fraud vectors

1. Stolen device (IMEI blacklist)

Detect: dial *#06#, run an IMEI blacklist check. Flagged means stolen.

2. Carrier-financing block (DPP)

Detect: the IMEI check also catches active DPP blocks. Carrier flags the IMEI for unpaid balance; phone won't activate.

3. iCloud Activation Lock active

Detect: Settings → General → Transfer or Reset → Erase All Content. If it asks for the previous owner's Apple ID, the device is locked.

4. Google FRP / Samsung Reactivation Lock active

Detect: Settings → Accounts. If a Google or Samsung account is signed in, the seller must remove it before sale.

5. Cloned IMEI (logic-board swap)

Detect: the IMEI on screen (*#06#) doesn't match the IMEI on the SIM tray. Walk away.

6. Software-modified IMEI

Detect: the IMEI passes Luhn checksum but the lookup returns "Unknown" or the manufacturer doesn't match the device. Possible jailbreak / root exploit.

7. Battery health misrepresentation

Detect: ask for a screenshot of Settings → Battery → Battery Health WITH the device serial visible in About in the same screenshot. Anything else can be edited.

8. Aftermarket parts presented as OEM

Detect: Settings → Battery / Display on iPhone shows "Unknown Part" warnings. Galaxy: Knox warranty bit at 0x1 indicates rooting. Discount or pass.

9. Carrier-lock misrepresentation

Detect: Settings → General → About → Carrier Lock on iPhone. Settings → SIM lock on Android. Don't trust seller claims; verify in the menu.

10. Identity fraud (fake / borrowed ID)

Detect: compare the photo on the ID to the seller. ID number should validate via state DMV verifier (where available). Fake IDs in 2026 are sophisticated — physical inspection catches most but not all.

11. Hot phone "sold under duress"

Detect: seller wants only cash, won't meet at your shop, refuses to provide ID, prices the phone significantly below market. Walk away.

12. Phone-with-active-financing in seller's name

Detect: ask for the carrier's "device payoff confirmation" email. Without it, the carrier can blacklist the IMEI 30 days post-sale.

The 5-minute screening sequence

Run these in order. If any fails, stop and decide.

1. Photo of seller's ID. Verify match.
2. Dial *#06#, IMEI on screen.
3. IMEI matches SIM tray.
4. Run IMEI through the blacklist check.
5. Settings → check carrier lock state.
6. Settings → confirm no signed-in accounts (iCloud, Google, Samsung).
7. Battery health screenshot with serial visible.
8. Test physical state per the 12-point checklist.

The "walk away" rule

The single best fraud-prevention rule is: if any of the first six checks fails, you walk away — no negotiation. Every reseller who has been in business 5+ years has stories of "I had a feeling but bought it anyway" — the loss never makes the math work.

Insurance coverage

Inland marine / business personal property insurance covers theft and damage but NOT receiving stolen goods. If you knowingly bought a stolen phone, you're on the hook even if you have insurance. The screening sequence above is your only real protection.

The compounding cost of skipping

A reseller doing $30,000/month in revenue at 18% net margin makes $5,400/month profit. A single $400 fraud loss is 7% of monthly profit. Three a year is 21%. Most operations that fail in year 1 fail because their fraud rate exceeded 1.5–2% of buys, and the screening discipline didn't tighten in response.