Cell makers losing millions on prepaid phones

Cell makers losing millions on prepaid phones


Manufacturers are complaining that people who are buying thousands of prepaid mobile phones in the United States, are selling them for a profit in Latin America or Hong Kong and it’s costing them millions.

There are concerns raised by some that the proceeds from the sales are used to fund terrorism. The problem that the company faces is that buying a bunch of phones at once, or possessing hundreds of cell phones, is not illegal. Radio Shack and Wal-Mart, among others, have put limits on the number of phones that can be bought, but authorities have been unable to successfully prosecute those involved in the trade.

The reason the problem exists is that companies will sell phones at a loss to make money on selling the air time. People can buy a phone for $20, unlock it, and make a 100% profit, or even more.