WASHINGTON-TracFone Wireless Inc., the nation’s largest prepaid cell-phone company, has sued to shut down firms accused of buying large quantities of phones at major retail outlets and disabling proprietary software before reselling handsets for use on other cellular networks.
Miami-based TracFone, a subsidiary of Latin American wireless giant America Móvil, has filed lawsuits against two Florida firms-Sol Wireless and Pan Ocean-to date.
“These are the first two suits. I’m sure there will be more,” said James Baldinger, a lawyer in West Palm Beach, Fla., representing TracFone.
Nokia Corp., the world’s top mobile-phone maker, also has filed lawsuits in Florida to stop firms from unlocking its TracFone mobile phones, according to TracFone.
TracFone said it is losing millions of dollars to a practice it claims violates copyright and other laws. The proprietary TracFone prepaid software keeps phones from operating unless they are loaded with airtime minutes from a TracFone prepaid airtime card. Thus, Tracfone and Nokia earn revenues on prepaid card sales.
“TracFone considers it to be a serious problem,” said Baldinger. “These hackers have really been getting a free ride.”
In one lawsuit, Tracfone described what it claims private investigators saw when they approached Sol Wireless about buying several Nokia 1100 and Nokia 2600 models.
“One of the investigators observed defendant [Carlos] Pino take a Nokia 1100 wireless handset out a plastic bag, remove the back cover of the phone, and insert a small, black, square-shaped device approximately three inches in diameter into the back of the wireless phone where the battery is located,” according to the lawsuit. “The device was then connected by a black curled cord, similar to a telephone cord, to the back of a computer located on top of the desk. After a short time, the device was removed from the back of the wireless phone. This action took approximately one to two minutes to accomplish. Pino performed the same process on each of Nokia phones purchased by the investigator. The phones, along with a battery and charger, were then packaged in Nokia container boxes.”
Lawyers for Sol Wireless did not comment on the charges. Sol Wireless has asked a federal court in Miami to dismiss the suit. Pan Ocean could not be reached for comment.
TracFone’s description of Sol Wireless’ operations and lawsuit allegations generally appear to bear similarities to the recent federal probe of large purchases of prepaid phones in Texas and California. The FBI has largely discounted a terrorist connection, saying the stockpiling of phones bought at Target, Wal-Mart and other mass distributors of TracFone products is more likely a black-market operation.
Baldinger said he was aware of the federal investigation of significant prepaid cell-phone purchases in Texas and California, but refused to speculate whether they might be connected to activities in Florida.
“Tracfone is cooperating with law enforcement,” said Baldinger.
All the unlocking lawsuits are being consolidated in the U.S. District Court in Miami. Baldinger said discovery is ongoing in the lawsuit against Sol Wireless. A March 6 hearing is set on TracFone’s motion for a preliminary injunction to halt Sol Wireless’ business operations.
