Prepaid Phone Traffickers Stopped by T-Mobile & Court Injunctions

By Editor Wireless and Mobile News on August 7, 2008 12:09 PM

T-Mobile USA has obtained two final judgments and permanent injunctions as part of the company's ongoing efforts to combat the unauthorized bulk purchase and resale of T-Mobile prepaid mobile phones. One judgment was entered against defendant Rafiq Wazir Ali, individually and doing business as Fone Xchange, in a federal lawsuit filed in Houston. The other judgment was entered against ASPAC Inc., its principals and affiliates, by a federal court in Dallas, and awards T-Mobile $6.5 million in damages in addition to a permanent injunction against the defendants.

T-Mobile subsidizes its prepaid wireless phones making them more accessible to consumers who want to become T-Mobile customers. Traffickers such as Ali, Fone Xchange and ASPAC profit by pocketing those subsidies, preventing consumers from receiving the benefit of the subsidies and depriving T-Mobile and other wireless providers of new customers. Traffickers typically buy, or solicit others to buy, prepaid mobile phones in bulk from retail stores, remove the phones from their original packaging, discard warranties and manuals, hack into the phones' software, and resell the phones and accessories to unsuspecting customers at a substantial profit.

Consumers are sold phones without the manufacturer's warranties, accessories or user manuals. Since the phones may still carry T-Mobile's brand, consumers may believe they are purchasing handsets manufactured for T-Mobile and covered by original warranties.

The stipulated final judgments and permanent injunctions, entered by Judge Lee H. Rosenthal of the Southern District of Texas and Judge Jane J. Boyle of the Northern District of Texas, respectively, permanently prohibit the defendants from engaging in any activities in any way related to the bulk purchase, unlocking or resale of T-Mobile phones and from using the T-Mobile trademark. If the defendants violate the injunctions, the orders provide a mechanism for enforcement by the courts and, in the case of Fone Xchange, carry a minimum charge of $1 million in damages to be paid to

T-Mobile. Muhammad "Mubi" Mubishir, a defendant who violated a similar injunction in Houston federal court, recently pled guilty to criminal contempt of court and is scheduled to be sentenced by U.S. District Court Judge Melinda Harmon on Oct. 10.

T-Mobile has six additional lawsuits pending in federal courts across the country, as part of its concerted effort to protect consumers from prepaid phone trafficking, and has plans to file additional cases soon.