Home - - Mobile Karma Shuts Down As iCloud and Blacklists Challenge Used Phone Buyers

Mobile Karma Shuts Down As iCloud and Blacklists Challenge Used Phone Buyers

Mobile Karma, at one time the largest mobile phone recycler and reseller in the US, has shut down. The company bought phones from carriers, businesses and individuals, refurbished them and sold them online with a warranty.

The shut down came with little warning to customers. It was business as usual until Visitors to Mobile Karmas's site see this cryptic message:

At this time, MOBILE KARMA is unable to complete transactions.

If you need information or have questions regarding an order, product received
or other business, please send an email to Questions@MobileKarma.com


Although the message suggests the shutdown might be temporary, Mobile Karma's communication to its affiliate marketing partners doesn't hold out any hope:

Please accept this email as notice that Mobile Karma has ceased doing business. We have concluded all product transaction activity as of midnight on Friday, July 18, 2014. The business will officially be closing all business activities in the next few weeks. We are giving immediate notice to you and your business that all Mobile Karma contracts should be terminated effective July 17, 2014 and any remaining fees should be submitted for payment immediately to questions@mobilekarma.com. Please feel free to contact us should you have any questions.

Mobile Karma's future had been in doubt ever since its parent company ReCellular Inc. went into receivership and was acquired by eRecycling Corps in December. eRecycling Corps is a large wholesale electronics recycler which didn't have a retail sales business before acquiring Mobile Karma.

One can only speculate why eRecycling Corps shut down Mobile Karma so soon after buying it for a reported $2.9 million in cash. Maybe they just wanted Mobile Karma's recycling facility and inventory of phones and planned to shut it down all along. Or perhaps, like the original owners, they found that couldn't make a profit from the business.

The used phone business has never been easy but it seems to have gotten a lot tougher lately. There's always been a problem with unscrupulous individuals selling a phone and then when they have the money in hand reporting it lost or stolen to commit insurance fraud. Phones reported lost or stolen phones get blacklisted and blocked from activation by the carriers, leaving the purchaser stuck with a brick. Last year the US carriers started sharing their blacklists so it's no longer possible to activate a phone blocked on one operator on another one. Phones getting blocked post-sale leads to returns and refunds and hurt's a reseller's reputation

With  iOS 7 Apple made a change to the way the Find My Phone feature works that are causing big problems for used phone buyers. When Find My Phone is enabled on an iPhone or iPad running iOS 7 or latter, the phone is iCloud Locked, meaning the user has to enter their Apple ID and password in order to reset, wipe, restore or re-activate the phone. Apple tells users that they need to reset their devices by choosing Erase All Content and Settings under Settings > General > Reset before selling them but many users are neglecting to do so.  The result is that there are lots of iCloud Locked devices in the used phone marketplace. Some of these phones are stolen, but many are not. The iClould Lock hasn't been defeated and Apple reportedly won't remove the lock, even if you have a bill of sale from the original owner. If you get stuck with an iCloud Locked iPhone, contact the seller, the original owner can still remove the lock by logging into their online iCloud account and following the instructions in this Apple Knowledgebase article.

Permanently disabling a lost or stolen phone is a great idea. But Apple's implementation seems flawed. I would have expected that the owner would have to notify Apple that the phone was lost or stolen in order to lock it. Locking a phone simply because the original owner neglected reset it seems wrong.

In an effort to reduce smartphone thefts, Microsoft and Google have agreed to add a "Kill Switch" feature to Windows Phone and Android with their next major OS release. Hopefully their implementation will be a little more friendly to used phone buyers and sellers, than Apple's.




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18 comments:

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  1. I will miss Mobile Karma and Recellular. I bought above 25 phones from them over the past 4 years, and found them to be honest and straightforward to deal with. Their 30-day warranty/return policy was among the best around, and I used it 3 times for various reasons, with no difficulty. I could often find a phone at a lower price on Mobile Karma, especially with one of their periodic special offers. I just sent a box of 12 phones, five chargers and 5 spare batteries to their Cellphones for Soldiers operation in Dallas; I hope they do not shut that down too. They refurbished these phones, used them for spare parts and donated phone cards to soldiers serving overseas so they could keep in touch with their families more often. My daughter ran an operation at her college collecting unused cellphones from students and shipping them to Cellphones for Soldiers. They did a lot of good with these donations.

    ReplyDelete
    Replies
    1. Does anyone else think that the US government should provide soldiers free phone service to call home?

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    2. Yes the should but all there worried about is sending troops over seas and having them risk their lives

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  2. apple's implementation of the icloud lock is not flawed. apple wants people to buy iphones (new or used/refurbished) only from apple. want to recycle your iphone: do it through apple. screw everyone else. mo mo mo money for apple.

    ReplyDelete
  3. Mention the name Apple and all the haters wake up and hit the keyboard. Apple was heavily criticized for not doing something about iPhone theft, the #1 stolen item in NYC and other major cities. Many people hurt by the gangs, who worked as a team to beat on people trying to chase the thieves. The iCloud lock stopped almost all of that within a month. Now people complain that they cannot fence the stolen phones. Too bad. So sorry for you. Look at all the iPhones selling for small amounts due to iCloud lock. All those poor thieves and sloppy buyers who don't buy from reputable dealers...let's all feel sorry for them! Apple-hater trolls? Not so much.

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  4. Hmmm... Instead of finding out after purchase that you have an iCloud locked iPhone, how about people doing their due diligence by asking questions and/or inspecting the device BEFORE purchase to insure there is no lock. Seems pretty simple to me.

    ReplyDelete
    Replies
    1. You mean if you buy an "Aple" labelled 7S phone from the UIkrainian Mafia on Criaglist, it is not a sure thing? :(

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  5. Wow...bought 6 phones from them over the past year and had no problems at all. Sorry to see them go.

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  6. Bought 4 phones from them and they could not dial 911.
    First agent told me 'tough luck' and would not assign a RMA.
    Called another number I found and the guy gladly helped me return them for a refund.
    Thank goodness.

    ReplyDelete
  7. I recently purchased an iPhone that would not connect to WiFi, Siri did not work and sometimes would not send or receive messages. :( I mailed the phone back and when no refund has been issued, I find out they are out of business. So now I'm out $240, with no phone, and no way to find out if or when I will receive the refund.

    ReplyDelete
    Replies
    1. Have you emailed them at Questions@MobileKarma.com ? Or you can call their parent company eRecylingCorps at (972) 573-0300 eRecylingCorps is still in business and should be honoring MobileKarma warranties.

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  8. Shutdown was more cryptic than the splash page pictured above... up in the morning on Friday with newer stock, GoDaddy "buy this domain" page in the afternoon. Absolutely nothing that I saw on the site beforehand warning that they were shutting down. I was watching their inventory, hoping to buy from them when the model I wanted came back up... glad I didn't, now.

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  9. That's not really why, many similar companies have survived and prospered in the same environment. Unfortunately, Mobile Karma didn't have management. Foresight and planning would have prevented this.

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  10. I am so sorry to hear about this. I came to the site today to order phones
    for my boys. I dont want to get locked into a verizon contract for buying
    2 new phones at a discount. {Plz contact me when u are up again or suggest
    a reliable new source to buy used or fairly priced phones for the average
    mom. Thx

    ReplyDelete
  11. From an ex employee of many years.The buyout was a disaster from an internal viewpoint. No communication and became a hostile work environment. Mass layoffs and experienced staff replaced by untrained temps. No shock to us it tanked.

    ReplyDelete
    Replies
    1. Sadly, that seems to be the case with many acquisitions. Cocky new managers unfamiliar with the acquired company's business processes combined with the loss of experienced employees and their domain knowledge leads to screw ups, renue loss and red ink.

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  12. Mobile karma was great. I had only purchased a few phones from them. But to this date, they are still fully functional phones. I never did like having an account with a major company like verizon or at&t because prepaid was always cheaper and provided what I wanted. I was able to purchase a good and updated phone through Mobile Karma without worry of it not working or paying a ridiculous price. I've tried a couple other places and ordered from cellular country but that phone only last 3 months and kept over heating until it finally died. We need Mobile Karma back!!!!

    ReplyDelete
    Replies
    1. Sorry to see them go. I found MobileCellMart.com, on the internet and have purchased 2 phones from them with no problems.

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