Verizon Wireless Accused of Cell-Phone Scam

Verizon Wireless engaged in a scam in New York that made its parent company, Verizon Communications Inc., appear more profitable than it actually was, a lawsuit alleges.

The mobile-phone company worked with subagents of a retailer in New York to activate inexpensive prepaid phones for six months for the purpose of increasing activation numbers, and some of the phones were never even given to customers, the New York Post reported, citing a lawsuit filed by ZCom. ZCom reportedly operates 120 stores in the New York City area and subleases 90 of them.

ZCom, which is seeking more than $1 billion in damages, claims Verizon Wireless participated in the scam with some of the sub-lessors.

Verizon and ZCom are battling each other in separate lawsuits, and Verizon Wireless has accused ZCom of prepaid fraud and terminated its license to sell its products effective Jan. 31, the Post reported.

A Verizon Wireless spokesperson declined to comment to the newspaper on the latest lawsuit.