T-Mobile Wins Injunction and $5 Million in Damages from Prepaid Phone Traficker DK Wireless

By Editor Wireless and Mobile News on March 10, 2009 11:33 AM

T-Mobile USA announced it obtained a final judgment and permanent injunction to combat the unauthorized bulk purchase and resale of T-Mobile's prepaid mobile phones and accessories.

The order, handed down by a federal court in Brooklyn, N.Y., permanently enjoining DK Wireless Inc. (which does business as "Wireless Touch" and "Talk 2 Me"), IA Communication, Inc, and the companies' principal, Ajay Mehta, from continuing to traffic in T-Mobile prepaid wireless phones. The judgment also awards T-Mobile $5 million in damages against the corporate defendants.

T-Mobile USA subsidizes its prepaid wireless phones in order to make them more accessible to legitimate consumers who want to become T-Mobile customers. Traffickers Mehta, Wireless Touch, Talk2Me, and IA Communications profited 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 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 then resell the phones and accessories to unsuspecting customers at a substantial profit.

Currently T-Mobile has prepaid phones starting at $19.99 with minutes ranging from 10 cents a minute on the dollar a day plan or 30 minutes for $10.00 with per minute rates decreasing the more time bought.

The T-Mobile says that consumers are harmed and 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 T-Mobile's brand, consumers may believe they are purchasing handsets manufactured for T-Mobile and covered by original warranties.

"T-Mobile is committed to protecting consumers and our company by shutting down these traffickers," said Dave Miller, senior vice president and general counsel, T-Mobile USA. "We are pleased by the results in the cases and the impact they have had on reducing this fraudulent trafficking activity. T-Mobile remains committed to prosecuting other similar offenders and is taking steps to investigate and prosecute additional and ongoing fraudulent activity, wherever and whenever it occurs."

The stipulated final judgments and permanent injunctions, entered by U.S. District Judge Charles P. Sifton of the Eastern District of New York, permanently prohibits 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 a minimum charge of an additional $500,000 in damages to be paid to T-Mobile.

T-Mobile has previously been awarded more than $9 million in judgments entered in other similar cases, and has several additional lawsuits pending in federal courts across the country as part of its concerted effort to protect consumers from prepaid phone trafficking.