The same scam is tried on unsuspecting customers when they buy stolen phones that are tied to an iCloud account. Apple has done a good job of deterring the theft, but this needs to better more obvious to the potential thieves, and they need to enhance it somehow to let it be known to anyone that tries to use it, that the phone will be traced until the original owner "releases" it, or there is special authorization at the carrier or Apple store. It's bad enough tracing it when lost, but when stolen, the thieves just need to remove the sim, and sit on it until they can figure if they can hack it. It should keep the last known location until you remove the phone, or for an extended period (30 days?).
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