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AT&T Files Suit Over Prepaid Phone Unlocking Scheme

  • Posted: Monday, February 11, 2008
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  • Author: pradhana
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  • Filed under: Wireless Service

AT&T has filed a suit against a number of companies it claims are buying AT&T prepaid GoPhones in bulk, unlocking them and then reselling them for a profit, which the carrier says is in violation of trademark law.

The practice of using the Internet to recruit “runners” who accumulate large volumes of prepaid phones through purchases at retail stores before hacking them for resale at higher prices -- which effectively amounts to a theft of subsidies -- was believed to be largely limited to prepaid wireless vendor Tracfone Wireless Inc. But, according to AT&T Mobility’s suit, T-Mobile USA Inc., Nokia Corp. and Virgin Mobile USA Inc. have filed similar suits in various courts around the country.

"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 suit.

The carrier says it is losing millions of dollars because of the practice.

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