2.) How did this "deprive AT&T of the stream of payments it was owned under the customers’ service contracts and installment plans."? A phone getting unlocked doesn't void a contract, so those customers are still on the hook.
These were probably 3rd party call centers or section of the company that ran their customer service lines which gave agents the ability to unlock devices.
The amount of spin this article is using to associate locking devices to keeping customers in long-term contracts is quite strong though.
The only "free money" scenario I can think of, is stealing AT&T devices, and reselling them in the black market/ebay/etc and thus pocketing all the $$$ without having the customers signing contracts.
Ps: this is why a large company needs a large Internal Audit department.
Edit: removed an off-topic NSA-AT&T comment, added the Ps
A large number end up in collections or written off. AT&T doesn't want to issue unlock codes in those cases, because it severely reduces the chances of them getting paid.
Use this shady service to unlock without paying off the contract, and resell on the second-hand market.
If an iPhone costs $1k, maybe you paid $100 to get it out the door, then you can still make hundreds of dollars selling it.
2. Presumably, it's a combination of a number of mechanisms, like judgment-proof consumers or identity thieves unlocking and reselling devices.
Recently my parents switched carriers for whatever reason, so I had to get a new phone. Honestly I would have kept my Note4 for another year, but whatever. Being a phone from, what 2014? it was well paid off at this point.
1. I went to the AT&T Store, asked them to unlock my phone. Was told, no sorry, we don't do that here. "Call the support line."
2. Called the support line, waited 20 minutes, was transferred to the correct department, waited another 20 minutes. Was told, we don't do that over the phone anymore. Go to this website here.
3. Went to the website. It asks for the number that is printed behind the battery (y'know back in my day, you could remove batteries from the devices you owned and replace them) Next, it asks for some device ID Number that you need to ask the phone for. So you turn it back on, follow the directions, etc. Then you submit the form. Then they tell you it can take up to 48 hours to get the unlock code.
4. Wait.
5. Receive absolutely no confirmation or acknowledgement that your request was received or actioned on at all.
6. Buy a new phone because it isn't worth the hassle.
Once the phone is ported to another network, the original provider is basically SOL, contract or no.
>Fahd allegedly recruited AT&T “insiders” to install malware programs that gathered confidential information and submitted unlock requests using employee credentials via a remote server.
Sounds like the malware was stealing creds to be used to unlock the phones.
Those are just allegations, not facts.
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.
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?
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)
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.
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.
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.