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Used Cellphone bought on EBay "blacklisted" by T-Mobile

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I have attempted to do research on this and believe I have an answer but I guess I need case law to back me up and cannot find it.

 

Facts:

Bought used Nokia Lumia cell phone ("handset") on EBay for approximately $250 in mid November 2013 from seller in another state (Idaho). I live in NY. Checked that phone was not stolen and took it to T-Mobile for service a day or so later. Used handset successfully for six weeks on T-Mobile when suddenly on December 26, 2013- six weeks later- T-Mobile "blacklisted" the handset.

 

Blacklisting an EIME means that neither I nor anyone I may sell the handset to can use the phone on T-Mobile. The phone is only able to be used on T-Mobile by design. Thus this "blacklisting" renders the handset useless for its primary function-- as a cell phone and thereby diminishes its value to me and diminishes my ability to re-sell the phone in the secondary market. 

 

Calls to T-Mobile reveal the handset was owned by two other people, the original owner and a subsequent purchaser who never used/registered the phone (the EBay seller I bought the handset from who appears to sell other used and new cell phone items thus potentially qualifying him as a "merchant"). T-Mobile advised me that the EIME (the handset's unique serial number- EIME is what carrier's use to identify a telephone) was originally registered to the unnamed original owner who purchased the handset with a financing arrangement typical of those offered by T-Mobile and every other carrier. The the unnamed original handset owner had stopped paying his bill for the handset in accordance with the original owner's agreement with T-Mobile. T-Mobile would not tell me when the original owner stopped paying his bill. (This may be regulated by privacy laws.)

 

T-Mobile admitted that if I had called them and asked if there was a lien or unpaid balance remaining on the handset that T-Mobile would not have provided that information to a subsequent potential or actual purchaser. Thus, I, nor anybody else, could not have been "on notice" that an interest was held by T-Mobile. I had no knowledge that there was an outstanding balance on the telephone and do not know the identity of the original owner or his original state. T-Mobile advised that it would not let me pay the amount of the unpaid bill-- I figured this would be cheaper than buying a new handset. In fact, T-Mobile would not even disclose to me the amount of the unpaid balance.

 

Throughout the conversations with multiple T-Mobile reps during this lengthy call, I was advised to try and get in contact with the original owner and get them to pay the outstanding debt, essentially turning me into T-Mobile's debt collector.

 

Prior to the call with T-Mobile I did basic legal research (very rudimentary..) and believed, correctly or not, that the UCC governed this transaction and that in NYS clean title passes to a subsequent buyer for value who is without knowledge of the original interest of T-Mobile. (UCC 2-403) After explaining this to the T-Mobile rep and going on about the difference between buying a used car where there is a title and a handset where there is no title revealing a lienholder, the T-Mobile rep spoke to more managers who advised that although they personally believed it was bad policy and wrong, they were sticking by T-Mobile's policy and not un-blacklisting the handset's EIME. 

 

I had to go to a T-Mobile store and buy a new handset for $500 to replace the one that they rendered useless by blacklisting.

 

I understand the concept of "notice"- i.e. I need to have notice of the outstanding debt for them to be able to successfully assert their claim and I believe that T-Mobile fails badly here. They wouldn't disclose the existence of a debt even if I had called.

 

The other issue I discovered is that I believe that T-Mobile has no "secured interest" in the handset. My wife and daughter bought IPhones from T-Mobile around the same time that I began using T-Mobile. I looked at the contract and all the paperwork that was given to them and nowhere in the contract is the handset referred to as collateral or does the contract mention that the handset is "secured" or that there is a secured interest in the handset- nothing remotely relating to this. The contract promises to repay and the purchaser does not at any point grant a security interest in the handset. The contract is merely a financing arrangement and not a security agreement.

 

The blacklisting of the handset's IEME is what I have termed "constructive repossession" and intentional destruction of value of the handset even though they know it not in the original debtor's possession. If only $20 was left on the repayment, why are they blacklisting the handset? Additionally, T-Mobile was essentially "on notice" that the handset had a new subsequent owner (me) for six weeks before it blacklisted the handset. It had a duty to determine if it was blacklisting a subsequent bona fide purchaser and not the original owner. The T-Mobile rep stated that they don't care who owns the handset- a bill, with and undisclosed amount and uncurable by the subsequent purchaser, was due and they wanted their money. But they wanted it only from the original owner. This drives people to buy solely from T-Mobile and effectively kills the secondary market for handsets.

 

OK, this has been a long enough fact pattern/analysis. Any help anybody can give is greatly appreciated. The T-Mobile rep stated that they field many calls like mine where subsequent purchasers of used handsets find out, surprise, that there is an undisclosed outstanding balance by the original owner and that no matter how many intervening owners there are, T-Mobile holds the outstanding balance against the EIME of the handset. I mentioned that that makes this a good class action case. He agreed but abided by his employer's policy.

 

Again, thanks for your time and any help is appreciated.

 

 

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Here's the simple answer.

 

And, no, I don't have case law to back it up.

 

You basically had a contract with the seller for a usable phone. Now you can't use it. Your beef is with the seller. You can sue him in small claims court but you'll have to do it where he lives. Your travel cost and time off from work are not compensable.

 

T-Mobile is not, and wasn't, a party to your contract with the seller. It has no obligation to provide services to you or anybody else for that matter. It is also has an unpaid bill attached to that phone number and has a right to take whatever measures available to it to collect and that includes blacklisting the phone regardless of who owns it now.

 

Those last two paragraphs are the basic components of contract law and you can study contract law at a law library.

 

It's also the risk you take when you buy a used anything online from anybody.

 

If you don't agree with my analysis you are welcome to hire an attorney.

 

PS: You're dreaming if you think a class action has even the remotest chance of success.

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I disagree with adjusterjack's analysis. Unless the seller of the phone warranted against this sort of problem, it is not liable for this. It sold a handset that evidently worked — the phone functioned properly as evidenced by your ability to use it for six weeks. Indeed, there seems to be nothing wrong with the handset at all. Your only problem is that the carrier is unwilling to provide you service for the phone. The seller is not responsible for the carrier's decisions on service to the phone. The seller has no control over the carrier and can't do anything to fix the problem. Indeed, the seller may have had no clue that the original owner of the phone owed a bill that is unpaid or that the carrier might lock the phone. Did you get from the seller a guarantee the the phone wouldn't be locked? If not, I don't see any viable action against the seller. This is one of those things that would fall under caveat emptor — buyer beware. A buyer of used handsets needs to know that this problem may exist and seek to include provisions in the sale agreement to deal with it.

 

Your problem is that your lien analysis is also wrong. The carrier is not attempting to take possession of the phone and sell it to pay the bill. You own the handset, and the carrier doesn't seem to dispute that. So there is no actual or constructive lien on the phone. The carrier instead is simply refusing to provide you service. Unless there is something in federal or state law that requires a carrier to provide you cell service or that prohibits the carrier from refusing to provide service for the particular reason at issue here, you may be stuck. Yes, the refusal to provide service makes the phone largely useless. But that does not equate to functioning like a lien. It would be similar to a buyer of a car being refused service from the town's only gas station. A car is pretty much useless without gas. But while the refusal to sell you gasoline would render the car effectively worthless in that town because a car needs gas to go, it is not the same thing as a lien on the car.

 

In general, the law does not require a business to provide service to anyone. However, cell phone carriers are regulated services and there may be a federal or state rule on this point. I note, however, that several carriers seem to follow a similar policy of locking phones that are still under contract or have payments owed on them. This suggests to me that there is no rule that prevents carriers from doing this, though I admit I've not researched the matter. I suggest you try contacting the Federal Communications Commission (FCC), the Federal Trade Comission (FTC) and the NY Attorney General to see if they are aware of any rule that would help you or if they may be willing to go to bat for you on this issue. You might also want to contact a consumer rights lawyer to see if there is anything you can do about the carrier’s practice of locking phones in this circumstance.

 

I have no idea why adjusterjack says that a class action on this issue would have no chance since I gather that he is not knowledgeable about the laws that apply to wireless carriers and thus does not know if the practice of locking phones might be subject to attack under federal or NY state law. Maybe there isn’t a claim that would work, but unless one is really familiar with the law in this area, I wouldn’t completely rule it out. I’m guessing this is one of those gut reactions of jack’s based on his cynical view of class actions. Talk to a consumer rights attorney to find out if there is any possible claim here if you are interested in pursuing it. 

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 I would say it boils down to the documentation that came with the original purchase of the phone, and not necessarily the contract, but what is stated on the box for that phone (so maybe find a picture or scan of the packaging for the phone and  I would say that they need to state clearly on the box/packaging, that  this phone only works with the service that we provide, and there are conditions to being offered that service.     Thats if the phone is purchasable at a retail store without a service contract.     If you can only purchase the phone with an accompanying service contract, I'd say your not going to get anywhere... but if that phone has ever been sold in a retail/authorized environment without the need for an accompanying sales contract, then I'd say it is Tmobiles responsibility to clearly state on the packaging of the phone that the phone will only work with their service, and there are terms and conditions to that service (i.e. that this phone may be in-serviceable  if a service contract that was attached to it is unpaid etc)

 

If you are going to get them on anything, I'd say that would be it.    And you might even try small claims court to recoup the money for the phone. 

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The box for the phone doesn’t generally state anything about the service for the phone as the box is printed by the manufacturer for the phone, not the wireless carrier. The manufacturer doesn’t set the terms of service for the carrier. In any event, what was printed there isn't anything that would help the OP here. He didn't buy it new in the box, after all, and would not have seen whatever was printed there in the first place. He's not subject to whatever benefits or obligations the first buyer of the phone had in his/her contract with the carrier. 

 

Note that the phone is not limited to use on a particular carrier — the phone may be used with any carrier that uses the same type of wireless technology that the phone uses. The problem is that other carriers may not be willing to unlock the phone either. Though the OP is free to ask compatible carriers about that, of course.

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Smalls claims, T-Mobile and the seller. They are snow balling you. Mobile repiar center maybe able to over come the block. If you used credit card, make your case VIA fraud. The item you ordered wasn't actually what you received. For fraud claim you will be within statute of limitations. Choose your words carefully and 'demand' charge back from your credit card company. Or forget about it and go on with your life. Good luck.

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Just bought a used phone and got the message this phone is financed and has an outstanding balance and "may" not be able to be used on the network. Not stolen or anything like that.

 

So let me not get this straight. T-mobile is now in the business of selling phones at full price (under reduced or eliminated down payment finance agreements) in lieu of an Early Termination Fee instead of the usual and common known manner of the past and by most other carriers, in which phones that were subsidized - partially paid by you -  became your phone - independent of service arrangements, fees or restrictions. Now while this might seem clever, anyone that is willing to finance a phone with them and re-sell it - while it still has a balance - is likely not planning on repaying the finance agreement, and thus, what is a loss because of one customer becomes the total loss of a new prospective customer all around - who should never ****ing consider their service again. Seems like bad policy. And this is a result of T-mobile's fraud prevention which is trying to dominate the market while seriously reducing the cost of fraud loss - by allowing people to get really expensive phones - without a credit check which may or may not even totally eliminate the equivalent usual subsidized up front cost. Simply by calling it a down payment.

 

So now they believe they have the right to hold your phone as secured collateral (in effect)  and hopefully and likely in effect lock you into service until the end of the finance agreement under this contract-less new arrangement. (would you believe that's probably the usual 2 years under a regular subsidized contract) unless you close the finance agreement and pay for that ****er in full. This also effectively kills the aftermarket as the reduced or eliminated up front cost will likely create an aftermarket epidemic (of only blacklisted phones). By the time you go to sell that phone, after you paid for it it aint worth **** and it's time to buy a new one.

 

I barely notice the protections under the Uniform Commercial Code, however, one would think that if T-mobile "locked" this phone for use only on their network - they would be most certainly and effectively devaluing your product and you might have a leg to stand on since service goes hand in hand with the product in your hand. This would also naturally depend on whether they amended their new service contracts at the time of YOUR activation to include restrictions for a financed phone with a balance - which if it exists - would be the first thing they easily would argue to you the new activator. This is where policies SHOULD be created to ensure service rights and guarantees on commercial products, like requiring them to be bonded for performance of action on liabilities they create in the sale. And there is the likely answer. Since their is no legal performance of action, as their should be, under the law - they don't have to perform it.

 

Since these are finance agreements of a phone for full price under the guise of a contract-less service, I find it unconscionable so separating the phone from the service, they would so directly do so, and in doing so questionably byspass the UCC. I do however doubt no such provision exists within their many terms and conditions governing your new service that would not afford them the reasonable assurance, backed by a very large law firm, of dictating service requirements in this particular manner.

 

If service was guaranteed to original purchaser, and you can bring your own phone to their network, it's hard to believe they have a leg to stand on. They do not legally own or have an actual interest in that phone. And you would be correct they are causing harm on individuals that are normally protected by the UCC.

 

I think it would all boil down to how they would have the right to claim security in that phone like any other product. 

 

Short answer: The government still does not require the guaranteed performance of action for cell phone carriers essentially make these always THEIR phones. Until such time, phones should never be allowed to be legally "sold" but only leased - to avoid the confusion and harming the public. It's a product you never technically "own" and the old days of the aftermarket are going away at the unaware buyer's expense.

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I see this is an old post but I am curious. I am the orginal owner of an unlocked phone. I tried to activate on AT&T but it won't because was back listed by T-mobile for an unpaid bill I had with T-mobile. The catch is that a filed bankrupcy and list T-mobile as a debitee. My backruptcy petition was granted and debits I owed T-mobile were dismissed.

Isn't T-moble violating the backrupcy law by putting my phone on a blacklist and refusing to remove it unless a pay the bill dismmised by the court?

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Also I just thought of another case. Suppose I bought a used phone from a pawn shop who has dilgerntly tried to acertain that it was stolen or not. Doesn't the law protrect purchases from a pawn shop?

 

What if I took an blacklisted and tried to get the identiy of the owner form the carries, which of course they would refuse, then place an ad in the lost and found section of the paper. It's it true that after a certain time the "stolen/lost" phone would become legaly mine and offically not stolen/lost anymore. This should allow it to be taken off the blacklist shouldn't it?

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Isn't T-moble violating the backrupcy law by putting my phone on a blacklist and refusing to remove it unless a pay the bill dismmised by the court?

 

No.

 

They are not pursuing you for payment they are simply declining to something that you want them to do.

 

In other words "We're not entitled to the money but we're not obligated to make your phone usuable. But we would do it if you paid us but you don't have to pay us because your debt to us was discharged. We don't want your money unless you are willing to give it to us but we don't have to lift a finger to help you with the phone."

 

Get it?

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adjusterjack,

 

While your analysis is good I see it a different way. I am being respectful here, not a flame response so please don't take it this way. 

 

TMobile does not have a "secured" interest in the phone under the UCC. There is no language in the customer agreement that creates a "secured" interest, nor have they filed the requisite UCC-1 with the state to "publish" the lien.The TMobile debt was discharged in Bk. The cell phone should have been listed as an asset  on the Bk asset sheet of the debtor and made available to ALL unsecured creditors (or permitted to be kept by the debtor by the Court).  By blacklisting the telephone, which should have been listed as an asset, they have effectively created an unrecorded "lien" on the phone and made the asset unavailable to be sold to pay off other unsecured creditors. Again, this comes back to TMobile and other service providers creating a "constructive lien" on the asset, not the person. Basic UCC first year law school law provides that a bona fide purchaser of goods in the ordinary course of business who is unaware of the claim of another party obtains clean title. It is TMobile's right to refuse to do business with an individual. However, when they refuse to do business with an asset (the cell phone) because their is an outstanding balance owed by a prior purchaser, they are creating a "secured lien" where none exists. This matter is made even worse when they refuse to let the subsequent purchaser payoff the outstanding balance to release the claim. (Yes, I understand the laws about disclosure of financing arrangements to third parties, but why do you enforce one set of rules and refuse to abide by others.)

 

The case is highlighted even more so when TMobile and other carriers refuse to do business with a cell phone where another carrier, not they themselves, have an unpaid balance. So, as one writer above provides, he bought an unlocked cellphone from a third party that had been purchased from AT&T and AT&T had an unsecured outstanding loan due on the phone to the original purchaser, not a subsequent bona fide purchaser for value, but TMobile refused to do business with the phone and the subsequent purchaser until the AT&T balance was paid. All cell phone providers have a shared database that all carriers input information relating to ESN/IEME numbers of cell phones with outstanding balances and one provider will not give service to a phone that has an outstanding balance with ANOTHER provider. Carriers determine that an unsecured loan was made vs the cellphone by accessing this common shared database  This is an industry practice to collect debts and they are all in collusion. They each respect the others debts as their own and refuse to do business with the CELLPHONE, not just the individual that was the original purchaser who took out the unsecured loan. This is a constructive secured lien and is illegal under the law. 

 

BTW when I told this to the TMobile rep he said, "You should just buy your phone from TMobile, not from anybody else." 

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BTW, when I spoke to a TMobile rep about this common database I was informed that a phone where there is an outstanding unpaid/overdue balance is deemed to be fraudulently obtained and thus the carrier has the right to add it to the database of "stolen" phones. This was not the intention of the FCC when creating the database. The database has now been re-purposed to collect debts or brick phones bought by innocent third parties for value in the ordinary course of business. 

 

This arena is ripe for a class action suit. Clearly someone in bankruptcy did not fraudulently obtain his phone. He took a loan for it and had the loan was discharged. The carrier is out the outstanding balance due on the phone. Period. This goes to highlight the bad faith on the carrier's part in using the database--there clearly was no fraud here.

 

If carriers want to turn their unsecured loans into secured loans they should just create a secured interest in them by filing the requisite UCC-1 with the state and amending their loan agreements accordingly to reflect that the cell phone is a secured asset and the carrier has a secured interest in it. The solution they use now- re-purposing the common database- is flat out wrong and innocent third parties are paying the price for it. 

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Filing a UCC-1 does not create a secured interest.  It is a public notice of the existence of a secured interest.  The terms and conditions grants a secured interest in the phone to the phone company during the term of service - unless the phone is bought directly, of course.  Also, selling an item that is subject to a security interest is a crime - it is embezzlement.

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Isn't T-moble violating the backrupcy law by putting my phone on a blacklist and refusing to remove it unless a pay the bill dismmised by the court?

 

If the sole reason that you are on the blacklist is that you did not pay the debt then I believe the creditor is indeed violating the bankruptcy discharge order. The first step would be to remind the carrier that the debt was discharged and that any action now taken to collect the discharged debt would be a violation of the discharge order. If they still refuse, discuss with a bankruptcy lawyer the possibility of seeking sanctions for the violation.

 

 

No.

 

They are not pursuing you for payment they are simply declining to something that you want them to do.

 

In other words "We're not entitled to the money but we're not obligated to make your phone usuable. But we would do it if you paid us but you don't have to pay us because your debt to us was discharged. We don't want your money unless you are willing to give it to us but we don't have to lift a finger to help you with the phone."

 

Get it?

 

 

I disagree. While the carrier has no obligation to enter into a new service arrangement with the bankrupt debtor, it cannot prevent the debtor from using his own property as a way to collect the debt. Blacklisting the phone is not refusing to do new business, it is step taken as a way to collect the debt already owed — that’s the only purpose the carrier has in doing this. And that's a violation of the discharge order. 

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Hi NCLawFinder,

 

It looks like you got a lot of great feedback from our Answers Community! Hopefully, they've given you some helpful starting points for doing additional research on your situation. Keep in mind that you can also discuss your situation in greater detail with a bankruptcy lawyer. You can find bankruptcy attorneys in your area by searching FindLaw's lawyer directory.

 

Good luck!

 

The FindLaw.com Team

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The part that I don't understand is why T-mobile is not willing to let the aftermarket buyer know as to the balance owed? This does not make sense if the T-mobiles intention to black list the phone to collect the money owed. Releasing this information should not have anything do with privacy laws.

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The part that I don't understand is why T-mobile is not willing to let the aftermarket buyer know as to the balance owed? This does not make sense if the T-mobiles intention to black list the phone to collect the money owed. Releasing this information should not have anything do with privacy laws.

 

Federal law requires that telecommunications carriers, including wireless phone carriers, keep private the records of their customers. 47 U.S.C. § 222. There is an exception in that law that allows disclosure of information to “to initiate, render, bill, and collect for telecommunications services.” However, whether that woud be interpreted to allow the carrier to disclose to a subsequent buyer of the phone what the previous owner owed so that he could pay the bill and unlock the phone is something I don’t know. If the issue is unresolved, the carriers may well take a conservative position on the matter to avoid possibly violating this statute. 

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Might not make sense but it's certainly within the company's rights to make the decision not to release balance information.

 

This thread illustrates the risk in buying used cell phones.

 

Especially from somebody you don't meet face to face. In a face to face buy you can say to the seller "Before I give you the money, call the company and authorize them to discuss your account information, then hand me the phone."

 

Then if the seller balks or there is an unpaid balance or any other problem you just walk away with your money still in your pocket.

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