The recent case of three Palestinian-Americans being accused of terrorism, and then later of fraud, for buying 1,000 prepaid cell phones, has brought attention to the practice of buying such cell phones for resale at a profit elsewhere. Companies like Tracfone sell these handsets at a loss in anticipation of selling many minutes to the user at a profit. But if the cell phones are used elsewhere, or on another network, it's just a loss for the prepaid operators. Of course, they want this practice stopped, and are resorting to absurd arguments, like claiming that the proceeds from this practice could go to finance terrorism. But the proceeds from any business could, in theory, finance terrorism. What the prepaid operators really want is legal protection of a business model. We've seen this over and over and over again, as companies look to the government to help them avoid making changes. And with the government often eager to comply, saying such action is part of the battle against terrorism is a nice excuse.
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