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Court convicts prepaid phone trafficker

Tracfone has been hot on the trail of people who resell their phones en masse. This unrelenting attitude has finally resulted in a conviction, as Muhammad Mubashir has pleaded guilty “to charges of criminally disobeying a federal court order prohibiting him from continuing to purchase, tamper with or export prepaid mobile phones.”

Here’s how the whole thing works. People go to Wal-Mart, Target, and other retailers, and buy a ton of those prepaid phone packages. These come with a phone and some introductory minutes. They’re cheap, so it’s easy for people to buy a ton of them. They then unlock the phones and sell them both internationally and domestically for a tidy profit, since the phone itself is worth more than the trafficker paid for the package.

If only Wal-Mart could be so up front as to this reasoning.

This hurts companies like Tracfone, because they’re essentially subsidizing the phone, with hopes that they’ll be recouped when you buy more and more minutes. But when a trafficker gets the phone, clearly they’re not buying any more minutes. So that subsidy is a sunk cost.

“TracFone will continue to aggressively pursue those who participate in prepaid mobile phone trafficking because it undermines our ability to provide an affordable, quality mobile phone to our customers,” said F.J. Pollak, president and CEO of TracFone Wireless Inc., based in Miami.

The most deceptive part of trafficking is that the resellers often advertise the phones as new. True, they likely haven’t been used heavily, if at all. But they are unlocked, and therefore altered from their original state. This not only can cause problems with the function of the phone, but it voids the manufacturer’s warranty.

I’m sure Tracfone hopes this sends a message to other such operations. I think it will take more conviction than one to get the point across.