AT&T Raised The Price Of The iPhone 3GS Price To Prevent Fraud

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Photo by Patrick Haney - http://flic.kr/p/9ekTdn

If you've wondered why AT&T recently increased the price of the iPhone 3GS from free to 99 cents, you weren't alone. One of the best explanations so far involves the minimal price reducing a growing amount of fraud.

Although Apple cut the iPhone 3GS price to free with AT&T contract when announcing the iPhone 4S, there was quite a bit of head-scratching over the carrier's pricing move, particularly due to the GSM-only handset eliminating an competitive reason for the carrier's pricing change. Although AT&T gave no clue to the reason behind the price switch, the carrier CEO Ralph de la Vega remained "confident consumers will agree that [the iPhone 3GS] remains one of the best deals for a leading smartphone."

Perhaps too good of a deal. AT&T had warned about possible shortages of the phone should it be offered completely free. Indeed, a plausible reason for the new 99-cent price could be to reduce such demand. However, the reader of one tech blog suggested AT&T wanted to ensure the free offer did not encourage fraud.

"I work at AT&T, this is being done to help prevent fraud as the 99 cents cannot be billed to your bill," claims a MacRumors reader identified only by the handle Metcury46l. "Fraudsters are using stolen identities to steal these handsets," the user explains, a problem that began when the handset was made free. By selling the iPhone 3GS, rather than giving it away, AT&T can require a credit card or debt card and an associated billing address. Mystery seemingly solved.

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