Starting with iOS 7, deleting an iCloud account or restoring a device requires Find My iPhone to be disabled. Find My iPhone, in turn, requires the user to enter the password for the Apple ID attached to the iCloud account. This system ensures that phone thieves can’t remove the account and avoid being tracked through the Find My iPhone website.
Unfortunately, there’s a pretty easy way to bypass this requirement, as demonstrated in the video above. To do so, you first need to tap both “delete account” and the switch to disable Find My iPhone at the same time in the iCloud settings panel. That’s actually the hardest part of the entire process. When prompted for a password, hold down the power button and shut down the phone.
When you restart the phone, you’ll be able to go into the iCloud settings panel and remove the account without being prompted for your password. After that you can plug the phone into iTunes and restore it with no problem. Not only that, but because Activation Lock requires Find My iPhone to be enabled, that feature won’t kick in after the phone is restored.
In short, whoever has your phone has just bypassed ever possible method you had at your disposal to locate it again. The good news? Putting a passcode on your phone (especially with a short timer) prevents anyone from getting into the iCloud settings at all.