What can thieves do with a stolen iPhone 4?

My iPhone 4 was stolen a few days ago.

It has a passcode on it, and the people at Verizon told me that they won't be able to get passed the first screen, but I don't believe that.

Everyone (in their right mind) has a passcode on their phone, and I've seen tons of kids at school selling stolen iPhones that have been reset and (somehow) unlocked…

what I want to know is, how did the person who stole my phone get into it, even though i have a passcode, and the find my phone app locked the phone?

since this is a major vulnerability, why hasn't Apple, or any other cell phone producer done anything about it?

I just have so many questions about this being possible… So if you've ever stolen a phone and gotten into it can you please tell me how thats possible
(don't give too many details because I don't want other people copy catting and stealing phones)

but I just can't see how that whole thing is done?

If your iPhone had iOS 7 before it was stolen, and you had "Find My iPhone" enabled, the thieves wouldn't be able to do much after restoring your phone. This is quite a useful feature in iOS 7 where if someone restores your phone, they wouldn't be able to activate it without knowing your Apple ID and password.

However, if you didn't enable Find My iPhone, they could just easily restore it and use it like that.

So your phone may be stolen, but it's very unlikely that they could see your data if they restored it.

Activate lost mode on find my iphone, that will make it almost useless as with iphones you can even put a permanent msg on it that can't be removed

The Verizon rep was right. IPhones these days have what is called Activation Lock, which means they would need your Apple ID & password in order to do anything with it.

You are assuming he/she got into the phone to do anything. In most cases if the phone has a passcode obviously they can't figure it out unless by pure luck, they would reset the phone, but as I mentioned earlier the AL would prevent them from going beyond that.

Again, Apple has done something about, the aforementioned AL.

They can use it and sell it. If you have Find My iPhone enabled you can wipe the device and lock it.