Police for mobile phone indusry

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Mobile-phone operators yesterday set up their own internal police force to combat the growing levels of fraud and theft in the industry and drive rogue dealers out of business.

The Crime Prevention Scheme, launched by the industry's lobbying body, the Federation of Communications Services (FCS), and backed by the Home Secretary, Michael Howard, will give a team of inspectors the power to enter dealers' premises and examine stock for stolen phones. At present up to 15,000 mobile phones are stolen each month; the FCS believes that some dealers hire criminals to steal phones to order.

The FCS chairman, Jonathan Clark, said: "Our objective during the next 12 months is to reduce cellular-phone thefts by 50 per cent. Any dealer . . . caught handling stolen phones will be refused trading terms by the four networks. In other words, they will be put out of business." However, the task for the internal force of six ex-police officers is daunting: Britain has 10,000 mobile-phone dealerships and about 5 million mobile phones are now in use.

The attraction of stolen phones is that dealers do not pay for a new phone, which can cost pounds 200 or more, and they get a bonus of about pounds 300 from the network operator for connecting a "new" customer. The stolen phone is given a new electronic identity by a process known as "rechipping" which, under the present law, is legal. The FCS has been lobbying for tougher powers to be added to the 1984 Telecommunications Act, which predates the explosive growth of mobile phones.

Other problems faced by the networks include "cloning" - in which a stolen phone is given the same electronic identity as an existing one and calls are charged to the existing phone's bill - and subscription fraud, in which consumers join a network under a false name, run up a large bill, then disappear.

Recent estimates say the cellular phone industry is losing more than pounds 100m to fraud, and honest consumers are bearing the cost in soaring insurance premiums.