Virginia Commonwealth University

Make it real.

Tighter Regulations Sought on Cash-For-Phone Kiosks

January 22, 2014

By Mike Denison
Capital News Service

ANNAPOLIS – The premise seems simple: drop off an unwanted phone at a recycling kiosk, receive instant cash and keep precious metals out of landfills. Consumers and the environment both win.

But, according to some politicians, so do phone thieves.

This fear has led some Maryland lawmakers to push for tighter restrictions or even outright bans on these machines.

This fall, Baltimore prohibited cash-for-phone kiosks in the city. Baltimore City Councilman Bill Henry, who initiated the measure, said the kiosks’ tendency to attract stolen phones outweighed the good done by businesses like San Francisco-based ecoATM, which has 10 kiosks in Maryland.

The issue is set to expand, as Delegate Mary Washington, D-Baltimore, is authoring legislation to increase restrictions on ecoATMs and similar kiosks statewide. Her bill would require the kiosk operator to submit records of all transactions to law enforcement officials within 48 hours and to withhold payment for 48 hours.

However, Ryan Kuder, ecoATM’s director of marketing, says the kiosks are designed for maximum security.

“There’s a lot of misperceptions about the way that the machine works,” Kuder said. “It doesn’t make any sense why the company who does more than anyone else would be targeted.”

The process of selling a phone at an ecoATM is simple: A machine scans a customer’s driver’s license, analyzes the model and condition of the phone, and offers a price. If the customer accepts, the phone is eventually recycled.

Many recycled phones are sold again. Others are harvested for usable parts, keeping materials within the phones — including precious metals and toxic chemicals — out of landfills, according to Kuder.

“Our mission is to get as many people as possible to participate in e-waste recycling,” Kuder said.

Kuder also said ecoATM has many security measures in place, including requiring customers to scan a valid driver’s license. With the help of cameras on each kiosk, every transaction is personally monitored by ecoATM staff.

“A fraction of a percent” of phones recycled at ecoATMs are later subject to police inquiries, Kuder said.

The kiosk cameras are often helpful for police. If a phone is reported stolen, the cameras on and around an ecoATM can offer high-resolution pictures of suspects, Kuder said. Additionally, ecoATM holds all phones for 30 days, or longer depending on state law.

Henry agreed that ecoATM has a sterling track record of cooperating with police, but he said he believes a more proactive approach is necessary.

“Nobody has said anything but (that) they are 100 percent cooperative,” Henry said. “While that’s nice behavior on their part, regulated secondhand-goods dealers are required to report to the police every day every single item that they’ve purchased.”

For some lawmakers, the most blatant problem with ecoATM and its competitors is the promise of instant cash. Henry says considering ecoATM’s identification requirements, the kiosks should have enough information to mail the seller a check. Washington’s bill would require providers to pay sellers with a check.

“The ability of individuals to collect phones … and receive cash without any information being collected, that is what the public safety problem is,” Washington said. “There are all kinds of ways for the value of these cell phones to be provided to the seller without cash.”

However, Kuder says the promise of cash is a huge incentive to customers and “a critical component” of his company’s business model.

The consumer response to ecoATM in Baltimore County was “fantastic,” according to Kuder. He said more than 20,000 phones and devices have been recycled there so far. When Baltimore city allowed ecoATMs, “there were people lined up to use the machine.”

Despite this response, Baltimore County Councilman David Marks stated in a press release this past month that General Growth Properties, the owner of three malls in the county, would voluntarily remove the kiosks.

Understandably, some Marylanders are opposed to the idea of a ban.

“I think it would be a bad idea, because (ecoATM is) keeping a lot of waste out,” said Shaneice Crowdy, a retail worker in Annapolis.

Even those who favor stricter regulation admit that ecoATM may be on to something.

“This is going to become something that other businesses are going to model,” Washington said. “We want to keep the ability to recycle.”

Henry said he would support putting ecoATM’s technology in the hands of pawn shops and other secondhand-goods dealers. This would allow for the convenience of the kiosk while facilitating human reporting and monitoring.