Telecom Fraud Ring Dismantled in France

French authorities have arrested nine people suspected of participating in an operation that involved selling unlock codes for operator-restricted mobile phones.

Mobile operators are in the habit of selling phones at very low prices or even giving them away for free to customers who are willing to sign long-term contracts.

This business decision is based on the idea that the real cost of the devices will be recovered in time from the profits made by keeping a user subscribed longer.

It is also common for such phones to be restricted to using only SIM cards issued by that particular operator for the period of the contract.

According to French investigators, the fraudsters were buying unlock codes from people working for telecom companies, who had access to their databases.

The codes were being bought for three euros each and were then resold on specialized Internet websites for around thirty. Some corrupt employees made as much as 25,000 euros per month.

Reuters reports that on average 100 codes were stolen daily for the past five years, costing mobile operators between fifty thousand to several millions of euros every month in lost profits.

Two siblings, a man and a woman, were arrested in Rennes, where they ran a mobile shop and are suspected of coordinating the whole operation.

"They will face charges including theft and handling stolen goods in an organized manner, interfering with automated data processing, embezzlement, receiving stolen property and criminal conspiracy," French police spokesman Philippe Lajeunesse, told the news agency.

The scheme was discovered after Vivendi and Vodafone-owned SFR, one of the leading mobile operators in France, spotted the breach in its systems last year and filed a complaint about it.

Bouygues Telecom and France Telecom's Orange have also been affected and authorities note that more arrests should be expected in connection with the case.