AT&T suing prepaid phone traffickers

a problem for Tracfone. People would go into Wal Mart, Target, wherever they sell prepaid phone packages, and buy a bunch of prepaid phones. Then they take those phones to a shop, modify them, and resell them for a profit. So not only are they making money on another company’s product, but they’re denying that carrier the services that they expect to come from those prepaid phone sales. AT&T is losing millions off these transactions, so it’s doing the America thing: It’s suing the resellers. (Now seems an appropriate time to remind you that most retail stores won’t allow you to buy more than two prepaid phones.)

“In an effort to prevent these unlawful practices, AT&T retailers have, under AT&T’s direction, implemented policies limiting the number of GoPhones an individual can purchase. Defendants, through their illicit bulk resale scheme, have taken steps to circumvent these policies by, among other things, employing large number of runners to make multiple purchases of GoPhones on behalf of the defendants,” stated AT&T in the 27-page complaint.

AT&T is citing theft of subsidies in the case. Quick explanation of that: Those prepaid phone packages you see in stores? Supposedly, they’re massively subsidized. That is, the phone contained in the package is not really that cheap. Supposedly. They expect to make up for the loss on the headset with your prepaid airtime. But if the handsets are hacked and resold for use with other carriers, AT&T doesn’t see that airtime they expect with the handset sales. Tracfone and AT&T aren’t the only ones suing resellers. According to AT&T’s case, T-Mobile, Nokia, and Virgin have also taken these matters to court. So this could be a bigger problem than we originally thought. [RCR Wireless News]]]>