T-Mobile USA says it obtained a final judgment and permanent injunction as a part of efforts to fight unauthorized bulk purchase and resale of its prepaid phones and accessories.
The order was handed down by a federal court in Brooklyn, N.Y., permanently enjoining DK Wireless (which does business as Wireless Touch and Talk 2 Me), IA Communication and the companies’ principal, Ajay Mehta, from continuing to traffic in T-Mobile prepaid wireless phones. In addition, the judgment awards T-Mobile $5 million in damages against the corporate defendants.
T-Mobile joins other prepaid service providers in its attempt to end phone trafficking. It’s become a big enough problem for TracFone Wireless that it initiated an ad campaign about it last year.
Service providers subsidize their phones, so when traffickers buy boatloads, re-program them and sell them overseas, the operators lose out on any potential revenue they could get from customers using the phones.
Prior to the New York court’s ruling, T-Mobile was awarded more than $9 million in judgments entered in other similar cases. It has several additional lawsuits pending in federal courts across the country.
In an SEC filing, Virgin Mobile USA estimates that in 2005, 2006 and 2007, about 228,000, 322,000 and 76,000 of its handsets were bought and resold in bulk, which resulted in a loss of about $25.4 million, $30.4 million and $5.2 million, respectively, consisting primarily of lost subsidies and promotional expenses.