On hold

City Council considers banning automated purchasing machines that dispense cash for small electronics.

Fast cash: There are 650 eco­ATM kiosks na­tion­wide, in­clud­ing two ma­chines in Frank­lin Mills. The auto­mated pur­chas­ing ma­chine scans a device, makes an of­fer for it and then dis­burses cash to the seller. PHOTO COUR­TESY OF ECO­ATM

City Coun­cil is con­sid­er­ing out­law­ing ma­chines that dis­pense dol­lars in ex­change for small elec­tron­ics like smart­phones and iPods as one way of curb­ing skyrock­et­ing phone thefts.

If the meas­ure by Coun­cil­wo­man at-large Blondell Reyn­olds Brown and Coun­cil­man Curtis Jones suc­ceeds, Phil­adelphia won’t be the first city to pro­hib­it ma­chines like the two eco­ATMs in the Far North­east’s Frank­lin Mills.

In mid-Septem­ber, Bal­timore’s City Coun­cil mem­bers passed their own ban on eco­ATMs, claim­ing the elec­tron­ics-re­cyc­ling ma­chines or any like them provide easy money for thieves who swipe cell phones, and Mary­land state le­gis­lat­ors are con­sid­er­ing draft­ing a statewide ban, Bal­timore TV sta­tion WMAR re­por­ted on Sept. 16. The Bal­timore Sun last month re­por­ted River­side, Cal­if., also has banned the ma­chines.

An auto­mated pur­chas­ing ma­chine scans a device, makes an of­fer for it and then dis­burses cash to the seller.

A pub­lic hear­ing on the Phil­adelphia meas­ure, Bill No. 130693, will be con­duc­ted at 2 p.m. on Thursday, Oct. 24, in City Hall’s Room 400.

Jones and Reyn­olds Brown’s or­din­ance is not ex­actly modeled after Bal­timore’s meas­ure, said the coun­cil­wo­man’s chief of staff, Dav­id Forde. “There are dif­fer­ent nu­ances,” he stated in an Oct. 18 email to the North­east Times.

“The coun­cil­wo­man read an art­icle put out by AAA that noted Phil­adelphia as the No. 1 loc­a­tion for stolen smart­phones in the United States,” Forde stated. “She then asked her staff to in­vest­ig­ate ways in which we could help stem the prob­lem. One sug­ges­tion was to lim­it the op­por­tun­ity to sell stolen phones. The bill to ban these types of ma­chines in Phil­adelphia was then pro­posed.”

Po­lice have been warn­ing res­id­ents to not use their high-priced, high-tech toys in pub­lic be­cause they run the risk of los­ing them to rob­bers. And, in the past year, there has been a rash of smart­phone rob­ber­ies.

Capt. Frank Palumbo, com­mand­er of the 2nd Po­lice Dis­trict, said small elec­tron­ics rep­res­ent easy — and big — scores for crim­in­als. He said a rob­ber who holds up someone on a city street takes a chance he will get only a few dol­lars. Tak­ing a smart­phone guar­an­tees a big­ger re­turn.

Be­ing able to get paid for a swiped phone without any hu­man in­ter­ac­tion makes that crime even more at­tract­ive, po­lice said.

Ry­an Kuder, a spokes­man for San Diego-based eco­ATM, claimed, however, that his com­pany ac­tu­ally is in good po­s­i­tion to de­ter smart­phone thefts be­cause an em­ploy­ee mon­it­ors each trans­ac­tion and be­cause the com­pany keeps re­cords of who sells what to its ma­chines and shares that in­form­a­tion with law en­force­ment.


Smart­phone and elec­tron­ics thefts have be­come a real prob­lem, es­pe­cially around schools. Al­though Philly leads the na­tion in smart­phone rob­ber­ies, the prob­lem is coast-to-coast.

The As­so­ci­ated Press re­por­ted earli­er this year that 1.6 mil­lion smart­phones were stolen in 2012 and that one out of three rob­ber­ies na­tion­wide in­volves smart­phones. New York At­tor­ney Gen­er­al Eric Schnei­der­m­an told the AP that New York state last year ex­per­i­enced a 40 per­cent spike in cell phone thefts. He ad­ded that stolen cell phones na­tion­wide cost con­sumers more than $30 bil­lion last year.

Kuder stated his com­pany’s ma­chines aren’t likely to be used by rob­bers who want to ex­change stolen phones for ready cash.

“A per­son on the eco­ATM team ap­proves every trans­ac­tion at every eco­ATM to com­bat fraud­u­lent sales,” Kuder said in an email to the North­east Times. “We check for val­id ID, make sure the per­son stand­ing in front of the kiosk is who they say they are, take mul­tiple pho­to­graphs of the seller, scan the seller’s ID and col­lect their thum­b­prints. We fully com­ply with all rel­ev­ant laws and reg­u­la­tions wherever we op­er­ate.”

Kuder said the com­pany ex­ceeds leg­al re­quire­ments by hold­ing all devices for 30 days and by col­lect­ing and re­port­ing more de­tailed in­form­a­tion than the law re­quires.

“With all these se­cur­ity fea­tures, thieves tend to avoid eco­ATM,” Kuder con­tin­ued. 

The com­pany has re­cycled more than a mil­lion devices in its 650 eco­ATM kiosks na­tion­wide, he said, and only a very small per­cent­age of the phones the com­pany col­lects are re­por­ted stolen, Kuder stated.

“If a thief does try to slip in a stolen phone, we co­oper­ate fully with loc­al po­lice,” he ad­ded. “We also re­turn the phone to the vic­tim, free of charge.”

The com­pany has had its two ma­chines in Frank­lin Mills since Au­gust 2012, Kuder said. The River­side, Cal­if., and Bal­timore bans on the com­pany’s ma­chines had no prac­tic­al im­pact on cell phone thefts in those cit­ies, Kuder stated, be­cause eco­ATM had no kiosks in either city. River­side and Bal­timore are the only towns that have banned the com­pany’s ma­chines, he said.

Even if Phil­adelphia does out­law auto­mated pur­chas­ing ma­chines, that doesn’t mean they won’t be avail­able in the sub­urbs.

Forde said Reyn­olds Brown cur­rently is fo­cus­ing on get­ting City Coun­cil to pass le­gis­la­tion ban­ning auto­mated pur­chas­ing ma­chines.

“If suc­cess­ful,” Forde wrote in an email to the North­east Times, “ap­proach­ing le­gis­lat­ors on the state level would be a po­ten­tial next step.”

Chances for pas­sage look good. 

“We have yet to re­ceive any in­dic­a­tions from her col­leagues that they will not be sup­port­ive,” Forde wrote. 

Forde ad­ded that the coun­cil­wo­man’s of­fice has heard from eco­ATM rep­res­ent­at­ives, and he be­lieves they and the coun­cil­wo­man will speak be­fore Thursday af­ter­noon’s hear­ing.

Kuder said Dav­id Mer­sten, eco­ATM’s chief leg­al of­ficer; Drew Spaventa, dir­ect­or of mar­ket de­vel­op­ment and com­pli­ance; and Max San­ti­ago, the com­pany’s dir­ect­or of law-en­force­ment re­la­tions, plan on testi­fy­ing.

Forde said rep­res­ent­at­ives of the Phil­adelphia Po­lice De­part­ment and the Uni­versity of Pennsylvania also are ex­pec­ted to testi­fy. Penn told the coun­cil­wo­man’s of­fice that stolen mo­bile phones is an is­sue for the uni­versity’s stu­dents. ••

How auto­mated pur­chas­ing works

To sell a smart­phone, for ex­ample, at an eco­ATM, the seller must:

• Place the phone in the ma­chine’s test sta­tion so the ma­chine can ex­am­ine the device and search for the highest price the com­pany can find in the world­wide mar­ket;

• Be more than 18 years old;

• Provide val­id iden­ti­fic­a­tion that will be ex­amined for holo­grams, wa­ter­marks and au­then­ti­fic­a­tion used in all 50 states;

• Provide a val­id thum­b­print.

Cus­tom­ers who agree to sell their devices re­ceive cash for them. Ma­chines are emp­tied weekly.

Eco­ATM is a sub­si­di­ary of Out­er­wall Inc., the same com­pany that op­er­ates Coin­Star coin-count­ing ma­chines and Red­box DVD rent­al ma­chines in area su­per­mar­kets.

Sources: eco­ATM, Out­er­wall Inc.

You can reach at jloftus@bsmphilly.com.

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