AT&T obtained final judgments and
permanent injunctions against defendants in four federal lawsuits stopping the unauthorized bulk buying and resale of prepaid mobile
AT&T has filed 14
lawsuits against companies and individuals in Texas, Florida,
California, and New York in an effort to stop the illegal activity. The lawsuits have resulted in a total of 15 permanent injunctions
and final judgments totaling $51 million in damages.
AT&T says it will file additional lawsuits to aggressively investigate
and combat the issue.
Prepaid wireless handset
diversion is an industry-wide issue. Middlemen typically buy prepaid
mobile phones in bulk, remove them from their original packaging,
discard warranties and manuals, hack into the phones' software and then
resell the phones and accessories to unsuspecting customers at a
substantial profit.
Among judgments AT&T has recently obtained:
- On
May 27, the U.S. District Court for the Eastern District of New York
entered a consent judgment and permanent injunction against IA
Communications, Inc. of Westbury, N.Y.; and DK Wireless Inc., d/b/a
Wireless Touch and Talk 2 Me, of Baldwin, N.Y. - On
June 15, the U.S. District Court for the Central District of California
entered a stipulated final judgment and permanent injunction against
Mohamad Farhat of Coachella, Calif. and his company, Delta Games, Inc.
of Montebello, Calif. - Also on June 15, the
U.S. District Court for the Southern District of Florida in Miami
entered a stipulated final judgment and permanent injunction against
defendants Ibrahim El-Zaatari and Tropical Export, Inc., both of Miami. - On
June 25, the U.S. District Court for the Central District of California
entered a stipulated final judgment and permanent injunction against
California Products International, Inc. of Downey, Calif.
In
all of the above final judgments, the Court found the defendants'
conduct violated numerous state and federal laws, and awarded a
judgment in the amounts of $3 or $5 million in damages.
The
injunctions permanently prohibit the defendants in each case from
engaging in any activities in any way related to the bulk purchase and
resale of AT&T prepaid phones, and from using the AT&T or
GoPhone trademarks in connection with such activities without
AT&T's authorization.
As a result of this
trafficking, consumers may be misled about the source and origin of
their mobile phones, and they are sold phones without their
manufacturer's warranties, accessories or user manuals. Because the
phones may still carry AT&T branding, consumers may mistakenly
believe they are purchasing handsets still covered by original
warranties.
"We believe this is wrong, it's
illegal, and it's bad for consumers," said Judy Cavalieri, vice
president of marketing and head of AT&T's prepaid phone products.
"We continue to investigate and will take aggressive action against
those we find are involved."
In order to make
prepaid phone service affordable for customers, AT&T subsidizes the
cost of certain GoPhone® prepaid handset models, and recoups the
subsidy through the sale of airtime.
"Prepaid
handsets provide a viable, affordable option for customers who choose
not to purchase a postpaid plan," Cavalieri said. "We're able to offer
these GoPhone handsets at such great discounts only if they're used as
intended on our network."