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Many of these devices are unlocked in bulk and sold overseas. This deprives them of the payments that they expected for fronting the cost of the device.

Nextgrid 7y ago
Selling the phone doesn't magically terminate the contract - they are still on the hook for all outstanding payments whether the phone is there or not. If fraudsters are doing this in bulk (and using false/stolen identities to sign up for the contracts in the first place) then the main problem here is inadequate identity checks & fraud protections during the initial purchase and not phone unlocking.
nathankunicki 7y ago
I still don't understand how. Regardless of who ends up using the phone, surely the original purchaser/signer is still on the hook for the monthly payments? ie. If I buy a contract iPhone from AT&T then unlock and sell on the phone, that doesn't nullify the fact that I still owe AT&T $100 a month for 24 months, regardless of where the phone is?
- toast0 7y ago
  If you buy an AT&T locked phone from a third party retailer, (ex Best Buy), you're expected to sign up for AT&T, but not under contract to do so; these phones are usually marketed for prepaid plans. AT&T will usually unlock them if you request it prior to using it on their network, but would likely not unlock them in bulk for exporters. I've purchased and used some of these when the price and timing was right and the frequencies aligned with my chosen network. It's more hassle than an unlocked phone, but sometimes the phone isn't available unlocked or locked to my chosen carrier. (More often, these phones are missing key frequencies, so not very useful on other networks)
- kevinsundar 7y ago
  Yes the original purchaser is still on the hook for the payments. However in America today there are absolutely tons of people who are on the hook for payments that they simply do not make. In the tech world people are generally financially well off that they don't realize this. There are people that will just shrug at the fact they owe money to a company. At least if the phone is locked the carrier can just cut off service as an attempt to hopefully get payment as the phone is rendered useless without payment. However with unlocked phones theres no way for them to get the money they are owed. It's insanely expensive for them to go after each and every subcriber legally that doesnt pay. Remember, they are loaning these devices to subscribers who cannot pay the entire cost upfront with the hope they will pay them back over the course of the contract. Unlocking the phone gets rid of the one collateral they have. Thats the reason your account must be in good standing to unlock early with every major carrier and why some do credit checks.
- turtlebits 7y ago
  There are many MVNOs and prepaid providers that sell phones cheap but are carrier locked to get you to spend money with them. Case in point - bought a iPhone SE last year for $35. It's locked to TracFone. Also a while back bought an iPhone 6s for substantially cheaper than the unlocked version from boost mobile and bought an "unlock" service on ebay.
- MertsA 7y ago
  It's "collateral" for the contract. Locking the phone is their way of putting a "lien" on it. Taking people to court over relatively small unsecured debts will eat through a good chunk of the margin that telecom companies are making off of those contracts in the first place. A locked phone is a couple hundred dollars worth of extra leverage to get a debtor to not default on the contract.
PhasmaFelis 7y ago
The article makes it sound like this particular guy was just charging consumers to unlock their personal phones so they could use them on different networks.
- DaniloDias 7y ago
  yeah- that is what the article says. I’ve been involved in these kinds of events in the past. The carriers go after anyone facilitating device unlocks extremely aggressively because there is a huge supply chain problem. Consequently, just because the article says things, I’m pretty wary of trusting them to be correct.
  - PhasmaFelis 7y ago
    I'm not sure what you're saying here. It sounds like you agree with the article that carriers go hard after anyone who helps unlock phones, but disagree on...what?

Nextgrid 7y ago

Selling the phone doesn't magically terminate the contract - they are still on the hook for all outstanding payments whether the phone is there or not. If fraudsters are doing this in bulk (and using false/stolen identities to sign up for the contracts in the first place) then the main problem here is inadequate identity checks & fraud protections during the initial purchase and not phone unlocking.

nathankunicki 7y ago

I still don't understand how. Regardless of who ends up using the phone, surely the original purchaser/signer is still on the hook for the monthly payments? ie. If I buy a contract iPhone from AT&T then unlock and sell on the phone, that doesn't nullify the fact that I still owe AT&T $100 a month for 24 months, regardless of where the phone is?

toast0 7y ago
If you buy an AT&T locked phone from a third party retailer, (ex Best Buy), you're expected to sign up for AT&T, but not under contract to do so; these phones are usually marketed for prepaid plans. AT&T will usually unlock them if you request it prior to using it on their network, but would likely not unlock them in bulk for exporters. I've purchased and used some of these when the price and timing was right and the frequencies aligned with my chosen network. It's more hassle than an unlocked phone, but sometimes the phone isn't available unlocked or locked to my chosen carrier. (More often, these phones are missing key frequencies, so not very useful on other networks)
kevinsundar 7y ago
Yes the original purchaser is still on the hook for the payments. However in America today there are absolutely tons of people who are on the hook for payments that they simply do not make. In the tech world people are generally financially well off that they don't realize this. There are people that will just shrug at the fact they owe money to a company. At least if the phone is locked the carrier can just cut off service as an attempt to hopefully get payment as the phone is rendered useless without payment. However with unlocked phones theres no way for them to get the money they are owed. It's insanely expensive for them to go after each and every subcriber legally that doesnt pay. Remember, they are loaning these devices to subscribers who cannot pay the entire cost upfront with the hope they will pay them back over the course of the contract. Unlocking the phone gets rid of the one collateral they have. Thats the reason your account must be in good standing to unlock early with every major carrier and why some do credit checks.
turtlebits 7y ago
There are many MVNOs and prepaid providers that sell phones cheap but are carrier locked to get you to spend money with them. Case in point - bought a iPhone SE last year for $35. It's locked to TracFone. Also a while back bought an iPhone 6s for substantially cheaper than the unlocked version from boost mobile and bought an "unlock" service on ebay.
MertsA 7y ago
It's "collateral" for the contract. Locking the phone is their way of putting a "lien" on it. Taking people to court over relatively small unsecured debts will eat through a good chunk of the margin that telecom companies are making off of those contracts in the first place. A locked phone is a couple hundred dollars worth of extra leverage to get a debtor to not default on the contract.

PhasmaFelis 7y ago

The article makes it sound like this particular guy was just charging consumers to unlock their personal phones so they could use them on different networks.

DaniloDias 7y ago
yeah- that is what the article says. I’ve been involved in these kinds of events in the past. The carriers go after anyone facilitating device unlocks extremely aggressively because there is a huge supply chain problem. Consequently, just because the article says things, I’m pretty wary of trusting them to be correct.
- PhasmaFelis 7y ago
  I'm not sure what you're saying here. It sounds like you agree with the article that carriers go hard after anyone who helps unlock phones, but disagree on...what?