You know that is a good question. If your ESN/MEID is in the lost or stolen data base verizon may just take the phone from the person. It may even be an innocent person that was duped by buying it and through no fault of their own is now burned as well.
I really don't know if they contact you, or even the police.
I can guarantee you they don't confiscate the device, it's unlawful seizure, hopefully the person who stole it and tried to activates it just returns it, there's no benefit to having it. They can ask for them to hand over the phone, but they are not require to give the phone up, even if it's someone else's property.
Umm I can't reveal my sources unfortunately. I have in the past and it wasn't a pleasant experience, however, I can reveal I experienced the same issue myself. I bought a phone from a pawn shop that was stolen, and when I tried to get it activated, the store rep said they couldn't physically take the phone from me, because I asked them if they were going to, and I returned the phone to the pawn shop, and got my money back.
I beg to differ, and my source is my local police department. Once the device is reported lost or stolen the phone store is obligated to report the possession of stolen property. Which is covered under the penal law.
If the person is in possession of stolen goods and it can be shown they bought the unit in good faith. (not the receiver of stolen goods) which is in the penal law as a crime. The device will be given to the original owner who reported lost or stolen. That is known as recovering stolen goods. Call your local police department and they will explain it to you.
Now the sale of stolen goods to a dupe is also a crime under the penal law. However only the original thief can be arrested. The dupes learn a lesson, the stores learn a lesson, and the thief will learn their lesson.
In any case verizon and other carriers will not activate it if its on the lost or stolen list they now all maintain.