AT&T Sues Former Employees For Unlocking Contract-Bound Phones

19 Sep 2015 | Author: | No comments yet »

AT&T (NYSE: T) Sales Reps Caught Selling Phone Unlock Codes.

AT&T said three of its employees secretly installed software on its network so a cellphone unlocking service could surreptitiously funnel hundreds of thousands of requests to its servers to remove software locks on phones.In a complaint filed in a Seattle federal court earlier this month, Atlanta-based AT&T Mobility has accused three former cellphone sales representatives of scheming to unlock AT&T handsets so that they could work on any network.AT&T (NYSE: T) has caught three former cell phone salesmen in Washington who set up an automated system to request phone unlock codes from AT&T’s systems, and is taking action in a federal court.

The locks prevent phones from being used on competing networks and have been an important tool used by cellular carriers to prevent customers from jumping ship. The company would sell unlock codes for anything from an iPhone to a Fire Phone, letting AT&T customers wriggle out of their contracts long before the subsidy was paid off. Consumers are legally allowed to request that their carrier unlock their phones — once they’ve been paid off in full — so that the phone can then be connected to a competing carrier’s network. They can be electronically removed, usually after fulfilling a contract obligation, but many websites offer the same service for a small fee with no questions asked.

The former AT&T Mobility employees allegedly received payments from a company called Swift Unlocks – which unlocks a variety of smartphones for a fee – to carry out the ‘illegal smartphone unlocking’ scheme. District Court for the Western District of Washington in which it accuses two companies, four people and an unknown software developer or developers, of participating in the audacious scheme. AT&T claims Swift Unlocks paid AT&T employee Marc Sapatin $10,500 and Kyra Evans $20,000 to install unlock software in the carrier’s systems while they worked at an AT&T call center in 2013. The virus seemingly gave Swift Unlocks the ability to remotely access their computers for the purpose of gathering codes which could help unlock an under-contract AT&T smartphone. The carrier first discovered something was amiss in September 2013 when a surge in the number of unlock requests alerted the company to the possible abuse of “Torch,” the software used to unlock cellphones, it said in the complaint.

The carrier, the nation’s second largest, says the defendants created a software program that allowed an external server to issue unlock permissions to AT&T phones. Upon investigation, the company discovered that the logins and passwords of two employees at a center in Washington were responsible for a large number of the requests and those requests happened within milliseconds of each other. On the computers of Evans and Sapatin, investigators found unauthorized software intended to route unlocking requests from an external source through AT&T’s computer system, it said.

Unfortunately for the accused, those requests were still being made under their own employee codes, so the company quickly traced the new requests back to them. “It’s important to note that this did not involve any improper access of customer information, or any adverse effect on our customers,” an AT&T spokesman told The Verge. AT&T says its investigators uncovered numerous iterations of the software, which grew in complexity until it was eventually able to submit the automatic requests. Although phone subsidies seem to be a dying trend, AT&T will still sell customers phones at a discounted rate in exchange for signing a two year agreement.

During the same period, AT&T was hacked by a criminal organization looking to unlock stolen phones before selling them, a breach that also resulted in a $25 million fine from the FCC. The lawsuit said that AT&T became aware of the malware around October 2013, at which point the employees had already made between $10,000 and $20,000.

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