[funsec] Prepaid cellphones: terrorist weapon or hot gray market item?

[Richard M. Smith]

>>> Hell you can work less and earn more running drugs..
 
Selling drugs is illegal.
 
Fox News has a pretty good story on the Michigan arrests:
 
http://www.foxnews.com/story/0,2933,208129,00.html
 
This site lists 110 buyers of bulk Noika GSM phones from around the world: 
 
http://importer.alibaba.com/buyeroffers/Nokia_Gsm.html
 
Richard
 
P.S. Extra credit question:  Why were the kids in Michigan separating out
the AC adapters from the TracFones they were buying?
 
  _____  

From: Dennis Henderson [mailto:hendomatic at gmail.com] 
Sent: Sunday, August 13, 2006 12:59 PM
To: Richard M. Smith
Cc: funsec at linuxbox.org
Subject: Re: [funsec] Prepaid cellphones: terrorist weapon or hot gray
market item?



On 8/13/06, Richard M. Smith <rms at bsf-llc.com> wrote: 

Here's an article I found that talks about the gray market for TracFone
phones that are purchased at Walmart and resold at a profit.
 
Richard

Posted by: Jaime R  <http://profile.typekey.com/Jaime%20R>  at August 10,
2006 02:55 PM

I tend to agree with Lawmans points. Plenty of people engage in buying bulk
cellphones -- especially tracfones. just look on ebay. Most are sold in the
US by the thousands per month. this is legal.

What is going on is tracfones are sold in the US at a substantial subsidy
and low minute intial purchase phones are way cheaper than buying phones
outright.

Tracfone works on GSM and it is easy to remove the chips, unlock the phones
subisidy lock (not in itself illegal) and ship the phones for a good profit.
Indeed a HUGE number of new unlocked tracphones are sold in the US on EBAY
everyday for about $20 over retail. bulk buying in lots of 10 to 20k is at
$25 a unit.
<http://www.alibaba.com/manufacturer/13876937/Buy_Nokia_Tracfone_1100.html>
http://www.alibaba.com/manufacturer/13876937/Buy_Nokia_Tracfone_1100.html 

Looking at walmart this week they had a tracfone on sale for an unusually
low $15wiht calling credits -- and this phone is currently on sale on ebay
for $60 new unlocked.

The chips are removed becasue they typcially have a $20 residual value IN
THE US. Just look on ebay.

So yes they are used by drug dealers, terrorists etc but but 99.99% of the
time this exact same scheme on a much larger order of magnitude is used in
the US, stays in the US, and has nothign to do with anything criminal and is
just taking advantage of a price differential caused by the phone subisisdy.
In markets this is called -- arbitrage. 

 
 
 
Full disclosure, the link is here to get more comments: 
 
http://debbieschlussel.com/archives/2006/08/all-american_te.html
 
 I personally think Jaime R has no clue what he's talking about.. All this
sneaking around for such a little profit.. Hell you can work less and earn
more running drugs..

 
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