Device Renewal Forum Announces Certification Mark for Refurbished Phones

NEW ORLEANS -- Growing with the proliferation of smartphones is the number of models that first owners no longer use. So, too, is the number of resellers hoping to capitalize on their availability. A group of wireless industry companies wants to ensure that phones that can still breathe profit into the supply chain get the full bang for the buck, and is developing a set of standards designed to bring pre-owned vehicle respectability to the second-hand cellphone market.

The Device Renewal Forum, formed in February by Sprint, Brightstar, eRecyclingCorps, ModusLink Global Solutions and the CDMA Development Group, announced at CTIA Wireless 2012 it has developed a certification mark to give consumers a way to “identify quality refurbished devices,” said Jeff Gower, president of Brightstar operator services. The forum is creating a certification standard modeled after the certified pre-owned model in the auto industry to give consumers peace of mind that phones bearing the forum logo will perform to certain standards. The certification mark will be made available only to DRF members whose refurbishment, inspection and testing processes meet quality standards established by the DRF technical specification subcommittee, which is devising test criteria and process standards for certification, DRF said.

The high resale value of smartphones makes them a target for thieves, and the personal information stored on them makes an easy target for identity theft, DRF said. Between 30 and 40 percent of robberies in major U.S. cities are related to cellphone theft, DRF said, and its certification program for used phones is designed help reduce the street value of stolen smartphones.

Wireless devices that meet the “rigorous refurbishment, inspection and testing requirements” established by the DRF to ensure “proper function, performance and appearance” will receive a certificate of acceptance and can bear a certification mark on packaging, DRF said. The stamp of approval indicates that “user expectations will be met and the device will not disrupt, degrade or harm wireless network performance,” DRF said, which could include reducing capacity or precluding roaming on a network.

The forum hopes to lend a seal of approval to the refurbished phone market that currently isn’t there, David Smith, senior director of Genco ATC, told us. The refurbished phone market is rife with companies selling rebuilt handsets “that are not of any standard,” Smith told us. “They're basically buying handsets” and reselling them “as is,” he said, without ensuring devices are free of personal information from previous owners and in “quality” working condition, which is one of Genco’s roles in the mobile device value chain. The goal of the forum is to take the refurbished phone market to the “next level,” Smith said.

The standard will be completed this year, Smith said, and a logo will be put on packaging to let consumers know that a refurbished phone has passed certain guidelines in performance, operation, data cleansing and aesthetics, he said. In addition to testing criteria, the group is still working on details, including the length of warranty customers will receive for rebuilt phones. Initially, the standard will only cover smartphones but the group expects to extend the program to tablets, Smith said.

Brightstar’s Gower cited EPA estimates of more than one billion retired cellphones “lying around unused,” that have ended up in landfills where they pose a hazard to the environment. But that trend is expected to slow as consumers are becoming increasingly “incentivized” to trade in used handsets for credit toward the purchase of a new smartphone. In the U.S., Gower said, more than 81 million cellphones are expected to be returned by consumers to retailer and operator locations during 2012 alone. Warranty and insurance claims account for more than 60 percent of mobile phones returned to retailers this year, he said, followed by buyers’ remorse, which the company forecasts will account for 22 percent of returned devices in 2012. Returns from consumer trade-in and buy-back programs will represent 18 percent of returns this year, he said.

Brightstar and eRecyclingCorps hope to boost those trade-in numbers through their evaluation and trade-in program, which gives consumers’ old phones a trade-in value with a retailer based on model, age, condition, and other factors. Gower of Brightstar said his company handles the “back end,” including real-time pricing updates to the system, logistics, test and repair, and determining “the best channel to get devices back into the marketplace,” he said. The company brings “real-time data to the device valuation process,” Gower said, using operations in 50 countries and 80,000 points of sale to give retailers and operators an automated pricing database, he said.

Through a logo program that guarantees reliability of pre-owned phones and gives consumers “an opportunity to be environmentally responsible,” Gower said, manufacturers, retailers and wireless operators can improve customer satisfaction and build brand loyalty.

Genco, which refurbishes cell phones for Brightstar, showed at CTIA its new CPI (customer personal information) tool that automates the process of deleting personal data from mobile phones. The tool saves time from having to inspect each phone manually, Smith said, but it adds a layer of security in the chain that phones have been wiped clean of data, he said. It also offers a layer of legal protection for Genco, Smith said. Carriers have imposed fines up to $10,000 for data not scrubbed from phones, he said.

In the automated deletion process, Genco captures any data, encrypts it and stores it on a server, Smith said. Most carriers “want to hang on to that information,” he said, so they can monitor any data violations that enter the chain in the refurbished market. “A dealer could put something” on a refurbished phone, he said, so storing the data on a server offers protection to refurbishers and carriers.