Peter Kafka

Recent Posts by Peter Kafka

[UPDATED]AT&T, the iPhone and New York City’s Newly Discovered Fraud Epidemic: What Doesn’t Add Up?

Update: AT&T is once again accepting iPhone orders from potential customers living in Manhattan.

grifters_1Live in New York City? Want to buy an iPhone? Don’t try ordering one from AT&T’s Web site: The wireless carrier, at least for now, won’t sell New Yorkers a new phone online, citing “increased fraudulent activity.”

But residents of Manhattan and the city’s other four boroughs can buy an iPhone directly from AT&T (T) stores. And the city’s five Apple (AAPL) stores will sell you one, too.

So what gives?

An initial report from, quoting an AT&T online service rep, suggested that the carrier shut down online sales because “New York was not ready for the iPhone” and that the city doesn’t “have enough towers to handle the phone.”

That answer might strike a chord with New York iPhone owners who gripe about the carrier’s capacity. But it strains credulity: Would AT&T really try to resolve its iPhone problem by hampering iPhone sales–and not tell anyone in advance? And if so, why not choke off online sales in San Francisco and the Bay Area, where heavy iPhone use also strains the carrier?

New story: Since the Consumerist story appeared Sunday afternoon, AT&T service reps have been telling New Yorkers like me that it won’t sell us the phone online because of fraud problems.

What does that mean? Sean, the pleasant AT&T rep I talked to tonight, told me he could sell me a refurbished, 8-gigabyte 3G iPhone online or over the phone. But if I wanted a new iPhone, he said, I’d have to go to a retail store.

Why? “There’s actually been a problem in that area with fraud for the iPhone. It’s kind of a high-risk area.” Sean then reassured me that he was “not saying there’s bad neighborhoods anywhere. That’s not what that means.” But he couldn’t offer any more details.

Digital Daily’s John Paczkowski, in an online chat with a service rep, got a similar answer. As John points out, this answer also doesn’t make a lot of sense. If New York really is beset by a plague of scammers, why is AT&T selling other expensive smartphones, like Research In Motion’s (RIMM) BlackBerry line, over the Web? (Click text below to enlarge.)


There are other things that don’t line up here: The AT&T PR rep I talked to tonight knew nothing about this. And shutting off online sales of the company’s most high-profile phone to the biggest city in America seems like the kind of thing a corporate spokesman would have an inkling about.

Likewise, AT&T’s Google (GOOG) ad campaign sends New Yorkers searching for iPhones directly to this page, which doesn’t mention that you can’t actually buy an iPhone online. If you click on the “Buy Now” and give the site a New York zip code, you get the following nonsensical message: “We’re sorry, there are no Packages & Deals available at this time. Please check back later.”

My hunch: This is a decision that didn’t get run all the way up the chain of command. And it’s one that’s going to get reversed sooner than later. I’ll update when I hear back from AT&T.

UPDATE: This won’t clear anything up: “We periodically modify our promotions and distribution channels,” says AT&T PR guy Fletcher Cook, via email.

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