U.S. Court Hands Down Historic Decision, Sets Legal Precedent for TracFone and Entire Wireless Industry

HOUSTON (Business Wire EON/PRWEB ) May 19, 2008 -- TracFone Wireless Inc., the largest U.S. provider of prepaid mobile phone services, says today’s guilty plea by an international trafficker of prepaid mobile phones is an important milestone in the industry’s battle against the bulk prepaid phone purchasing scheme throughout the U.S., an activity that includes altering the phones’ proprietary software, repackaging the devices and then reselling them domestically and abroad to unsuspecting customers.

TracFone will continue to aggressively pursue those who participate in prepaid mobile phone trafficking because it undermines our ability to provide an affordable, quality mobile phone to our customers

Honest consumers are harmed when they purchase these altered phones sold as 'new.' In most cases, the phones don't work as they should, and the manufacturer warranty is voided

Prepaid mobile phone traffickers are not legitimate entrepreneurs

We contend they are engaging in unlawful activity that harms American businesses and consumers. The fact that one of them is going to jail is a wake-up call for anyone else engaging in this activity.

Muhammad Mubashir, 27, of Sugar Land, Tex., pleaded guilty today before Judge Melinda Harmon of the U.S. District Court for the Southern District of Texas to charges of criminally disobeying a federal court order prohibiting him from continuing to purchase, tamper with or export prepaid mobile phones.

“TracFone will continue to aggressively pursue those who participate in prepaid mobile phone trafficking because it undermines our ability to provide an affordable, quality mobile phone to our customers,” said F.J. Pollak, president and CEO of TracFone Wireless Inc., based in Miami.

Prepaid phone trafficking is a nationwide concern for the wireless industry because it has the potential to drive up costs to consumers. To make wireless service affordable and accessible for everyone, TracFone heavily discounts the retail price of its phones far below its own cost, but expects to recoup its investment by providing service to customers through the sale of airtime cards and other services.

“Honest consumers are harmed when they purchase these altered phones sold as ‘new.’ In most cases, the phones don't work as they should, and the manufacturer warranty is voided,” said James B. Baldinger, an attorney with Carlton Fields representing TracFone.

Schemes like those organized by Mubashir exist across the country and involve groups of “runners” who purchase prepaid mobile phones from major retail outlets. The phones are then passed to middlemen who alter or remove the prepaid software and resell the altered phones as “new” at a significant profit to unsuspecting customers domestically and abroad in Latin America, Asia and the Middle East.

“Prepaid mobile phone traffickers are not legitimate entrepreneurs,” said Baldinger. “We contend they are engaging in unlawful activity that harms American businesses and consumers. The fact that one of them is going to jail is a wake-up call for anyone else engaging in this activity.”

About TracFone Wireless Inc.

TracFone Wireless Inc. is the largest prepaid mobile phone service provider in the U.S., and has been the leader in the 12 years since it was founded. TracFone is a subsidiary of America Movil (NYSE:AMX), the fourth largest mobile phone company in the world, and the largest in all of the Americas with more than 153 million mobile phone subscribers - more than AT&T, Verizon and Sprint. America Movil is traded on the New York Stock Exchange under the symbol AMX, and has been named top technology company by Business Week for the past 2 years (Technology Hot 100). For more information, visit www.tracfone.com.

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tracfone, wireless, prepaid phone

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