Governments

Governments and regulatory authorities are heavily impacted by illicit trade, including the illegal movement and sale of mobile devices. 

• Financial Losses: Governments lose tax revenue when mobile devices are imported, sold, or traded illegally, depriving public funds.
   
• Weakened Market Control: The illicit trade undermines regulations, making it harder to enforce quality standards, certifications, and taxes.
   
• Increased Crime: The illegal trade fuels organized crime, including theft and smuggling, posing challenges for law enforcement.

For example, Reuters reported in 2019 that Indonesia is expected to lose $141 million in potential VAT every year due to illegal mobile device trade.  

Law Enforcement Agencies

Law enforcement agencies are directly impacted by the illicit mobile phone trade, as it fuels crime and hinders investigations.

• Increased Criminal Activity: Stolen or counterfeit phones are used in identity theft, fraud, and terrorism, helping criminals mask their identities and conduct illegal transactions.

• Difficulty in Investigation: The global movement of stolen phones and the presence of counterfeit devices complicate fraud detection and enforcement of intellectual property laws.

• Resource Strain: Policing this trade diverts time, manpower, and budgets from other critical areas.

Mobile Device Manufacturers

Mobile device manufacturers face significant challenges due to the illicit trade of mobile devices: 

• Revenue Losses: The sale of counterfeit and stolen devices harms legitimate mobile brands by creating unfair competition and reducing market share, as these devices are sold at lower prices. 

• Brand Reputation Damage: Counterfeit devices often fail to meet safety and quality standards, damaging brand reputation and leading to negative consumer experiences. 

• Increased Production and Security Costs: To fight counterfeiting, manufacturers have to invest in IMEI tracking and anti-counterfeit technologies, which increases costs and impacts profitability.

Mobile Network Operators

Mobile network operators are also key stakeholders in the fight against the illicit mobile phone trade: It was stated in a 2017 EUIPO-ITU report that the presence of counterfeit devices in the market in 2015 led to 184 million fewer smartphones being sold by legitimate manufacturers. 

• Revenue Losses: Stolen or counterfeit devices bypass official channels, causing mobile operators to lose subscription income. 

• Network Integrity: Illicit devices can create security risks, allowing criminals to exploit network vulnerabilities for fraud or hacking. 

• Blacklisting Costs: Blocking stolen devices requires constant monitoring, increasing operational costs for network operators. 

Retailers and Resellers

Retailers and resellers are affected by the illicit trade in several ways: 

• Unfair Competition: Counterfeit phones sold at low prices create unfair competition, reducing profits for legitimate retailers. 

• Legal and Reputational Risks: Retailers face legal consequences and reputational damage if they unknowingly sell counterfeit or stolen devices. 

• Loss of Trust: Selling fake or stolen phones can erode customer trust and loyalty, impacting long-term business success. 

According to a 2017 report by the OECD, about 20% of internationally shipped mobile phones and 25% of computer game consoles are counterfeit. 

Consumers

Consumers are the most directly affected stakeholders when it comes to the illicit trade of mobile phones: 

• Risk of Counterfeit Devices: Unsafe, defective phones on the market that lack updates and pose risks like overheating or battery failure. 

• Data Security Concerns: Counterfeit or stolen phones often lack security features, increasing the risk of hacking, malware, and identity theft. 

• No Warranty or Support: These devices usually lack warranty coverage, and stolen phones may be blocked from networks, making them unusable. 

In 2018, Uganda disabled 9 million phones after discovering that an estimated 40% of all active devices in the country were counterfeit. 

The Global Economy

The illicit trade of mobile devices also impacts the broader global economy: 

• Lost Tax Revenue: Illegal phone trade deprives governments of tax income, affecting the broader economy and public services. 

• Market Disruption: Counterfeit and stolen phones undercut prices, destabilizing supply chains, jobs, and the mobile market. 

• Costly Countermeasures: Major investments in technology and enforcement are required, which diverts funds from other priorities. 
   

A 2021 GI-TOC report found that illicit trade harms developing countries and vulnerable populations the most, yet remains low-risk due to limited enforcement.