Verizon sued, loses in court after retroactively changing iPhone unlock policy

A Kansas man beat Verizon in small claims court after the carrier refused to unlock his discounted iPhone, citing a new "paid service" rule it created a month after his purchase – directly contradicting its own policy and federal FCC requirements.

Kansas resident Patrick Roach bought an on-sale iPhone from Verizon’s Straight Talk brand. His plan was to activate the phone and then wait to unlock it before switching carriers. This is a relatively common consumer workaround, which “usually saves you about half the value of the phone,” according to Roach.

The reason that phones are locked is to prevent them from being used on another network. It’s a way of ensuring customer loyalty, making opportunistic carrier switching almost impossible.

When Roach bought his phone, Verizon's policy stipulated that phones would unlock automatically 60 days after activation with no obligation to maintain contracted service.

The question is, what was he supposed to do in the meantime?

Well, he decided he would wait it out. But after two months and the phone still remaining locked, Roach realized that a seemingly routine purchase had now turned into a legal dispute.

Verizon changed the rules after the sale

Frustratingly for the customer, Verizon refused to unlock Roach’s phone, citing that it needed to be “60 days of paid active service” even though they made this rule amendment a month afterRoach bought and activated the phone

Roach had paid for one month of service, canceled, and waited the remaining time, which fully complied with the unlocking rules that existed at the time of purchase.

Retroactive changes are not as commonplace as you think in situations like this. However, the telecoms industry is in a constant change of flux with ever-changing terms and conditions. The customer in this case acknowledged that, but questioned the timing and ethics.

“They do have the right to change their policy going forward,” Roach said after, “but they can’t change the rules going backwards.”

Why Verizon is bound by FCC unlocking rules

Verizon, as a major player in the US, is under strict FCC (Federal Communications Commission) governance, especially as it’s the second largest telecommunications company in the US by market share (with 34%, just behind T-Mobile with 35%). Therefore, regulations are strict.

Verizon is expected to unlock the device automatically after 60 days, regardless of unique circumstances, or policy change, unless there is fraudulent activity involved.

Public Knowledge’s John Bergmayer (customer advocate) said the FCC order “just starts a countdown, with no ‘paid service’ requirement, or room for Verizon to just impose one.”

Taking Verizon to small claims court

Verizon subsequently offered a $600 out-of-court settlement, which was rejected outright by Roach, as he wanted to raise publicity of the issue and not sign a non-disclosure agreement.

“I highly value the non-monetary outcomes I would achieve in court – transparency, accountability, and the absence of restrictions such as NDAs,” Roach expounded in his rejection email.

The judge ultimately ruled in his favor, ordering Verizon to refund the cost of the phone and service fees, totaling more than $410.

“It was really starting to irk me that they were basically just going ahead with it anyway while they had an open request,” Roach said.

He doesn’t expect the FCC to penalize Verizon, though.

“It’s just kind of slimy of them, so I feel like it deserves a spotlight.”