Wireless carrier AT&T is the target of a class-action suit that claims the company profited from cell phone theft by aiding and abetting thieves.
The suit filed in California Superior Court by three plaintiffs alleges the wireless carrier assisted thieves "in earning illegal profits, by turning on, or 're-activating' said stolen phones."
The plaintiffs claimed in court documents that AT&T representatives said they were unable to block usage of stolen phones, and in turn made millions of dollars from the activity.
"Defendants actively have, for years, participated in this practice in order to make millions of dollars in improper profits by forcing legitimate customers…to buy new cell phones and buy new cell phone plans," the documents stated.
An AT&T spokesperson said the suit itself is "without merit".
The company announced this week it would join forces with other wireless carriers to block stolen cell phones and work with the FCC to create a database of smart phones and tablets that are reported lost or stolen. An AT&T spokesperson called theft a "serious issue" and said the new initiative would help to "provide a comprehensive industry and government response to the problem".
Verizon and Sprint previously blocked stolen phones. AT&T and T-Mobile joined this week after the FCC and law enforcement pushed for a national database of stolen devices to be created. The new database will render the stolen devices worthless.
"If the industry can help dry up the demand, we will take the profit motive away from the criminals," said Christopher Guttman-McCabe, a vice president at CTIA, a wireless trade group.
A decade ago, cellular devices accounted for 8 percent of thefts in large cities. They now account for more than 40 percent of thefts, according to the FCC.
During those 10 years, what was first petty theft has since become a much larger issue, jeopardizing the personal information of users who bank, pay bills and store other sensitive data on their devices.
"We're sending a message to consumers we've got your back and a message to criminals we're cracking down on the resale market," FCC chairman Julius Genachowski said after he announced the initiative this week.