TracFone provides two brands of service: Tracphone and Net10. The Main Difference is the Logo and the Prepaid Minute Rates and Service Options. Currently NET10 only offers GSM service but is apparently going to start offering CDMA service also.
The service allows a customer to buy airtime units to use on selected phones by Nokia, LG, and Motorola pursuant to a licensing agreement. TracFone sells digital cell phone models, although analog phones were once available. Depending on the region, TracFone service works in a GSM, TDMA, or CDMA network. TracFone does not build its own wireless network but "resells" wireless service from more than 30 providers, as a mobile virtual network operator. In the United States, TracFone operates on the AT&T, Verizon Wireless, Sprint, and T-Mobile networks, among others (such as Alltel and US Cellular).
TracFone requires the customer to activate a cell phone before use. Activation consists of calling the TracFone hotline number or going to the TracFone website and entering programming codes directly into the phone or by using the OTA feature (through radio waves provided by the customer local tower). The customer redeems units by entering a validation code into the phone or by using the OTA feature (Over the Air) on the prepaid menu, also know as the Redeem Airtime option. A single unit roughly equates to one minute of telephone airtime. Receiving SMS text messages is free on the Nokia 1100, 2600, and 3390 models and the Motorola V170 and C155 models but costs 0.3 units on the Motorola C139, C261, V176, and W370 models to open the received message. Sending SMS text messages costs 0.3 units on all GSM models. Sending or receiving SMS text messages costs .5 units on TDMA and CDMA models.
Customers must keep units on their phone after activating it to keep the service active. The schedule of these purchases varies depending on the purchase price of airtime units. If a customer does not add airtime before the due date that is displayed on the handset, the service, the TracFone phone number and any remaining units are lost. If service is reactivated within 60 days, the customer retains existing units on the handset. With GSM phones if the number is lost the customer will need to be sent a new SIM card (this is free of charge but the customer will have to wait 3-5 days).
The phones, airtime units, and accessories are available at various stores around the United States and online at the TracFone website. Airtime units are usually sold through cards that come in denominations of 30 (USD $9.99), 60 ($19.99), 120 ($29.99), and 250 ($49.99) airtime minutes which extend the active service by 90 (previously 60) days. The units and service days added to the TracFone will be added to the units and service days that already exist on the TracFone. There is a card for 400 minutes + 1 year of active service ($99.99) and another that provides 800 minutes + 1 year active service when minutes from other cards are doubled (e.g., a 100 minute card provides 200 minutes service, $139.99). There are also "Double Minute" cards, enabling you to get double the minutes on any future card purchases for the life of the handheld ($49.99). Under some circumstances, customers may also use special promotion codes that reward extra units on airtime purchases.
The TracFone service has enjoyed popularity among some customers, partially because of the Refer-A-Friend program, whereby existing customers could refer their friends to TracFone to get free airtime units. Moreover, TracFone has attracted some customers by promoting price-comparison, as well as its pre-pay service structure.
Note: The Refer-A-Friend program was pulled on 9/30/06, to be improved. This program continues to be unavailable.
In contrast to the popularity of the TracFone service, there have also been some complaints regarding TracFone's customer service practices. Example complaint reports can be found at Consumer Affairs regarding the quality of the product, the limitations of the service, and the business practices of the company.
TracFone customer service is outsourced to several companies, mostly in Latin America: countries such as Argentina, Bolivia, Honduras, Colombia, Guatemala, Belize, and the Philippines. TracFone's main goal is to perform a one-call resolution.
On February 9, 2007, a preliminary settlement in a class-action lawsuit against TracFone was approved in the Boone (County) Circuit Court in Kentucky. There is a case settlement website that certain TracFone owners can use to file a claim to receive a portion of the settlement.
Bulk-Buying loophole and TracFone legal actions
For several years TracFone has had the problem of its heavily subsidized handsets being bought and resold in bulk. In a common practice handsets are bought in large quantities, the airtime is legally harvested by removing the SIM card and the handsets are sold to bulk resellers. The bulk reseller can sell the phone and all of its parts legally.
The practice has become so widespread that TracFone has attempted to place additional exclusive locking software on its handsets. Despite the lock on the handset, the transferable calling credits and battery are often worth twice the purchase price of the phone itself.
In February 2006, TracFone began suing one large bulk reseller, Sol Wireless Group, on the basis of a claimed DMCA violation. The lawsuit was later settled, and Sol Wireless Group was ordered by the U.S. Federal District Court in Miami to not perform any further "unlocking" of TracFone cell phones.
In December 2006, TracFone filed a lawsuit against the United States Copyright Office and others, to protest a decision by the Copyright Office to allow United States consumers to "unlock" their cell phones.
However, TracFone's attempts were unsuccessful. The courts of law have decided that TracFone phones can be unlocked, and that it is the responsibility of TracFone Wireless to adjust its business model in such a way that resellers stop buying TracFone phones.
In early August 2006, during a heightened level of fear over the UK Bombing plot and a particularly favorable promotion by TracFone, a group of young Arab American men from Michigan who were buying TracFone phones in bulk were arrested in Ohio. A group of Palestinian-American men from Texas were arrested in Michigan a few days later, and authorities discovered nearly 1,000 cellular phones in their van. Although both groups indicated they were reselling the phones for profit, police arrested them for suspicion of terrorist activities. After determining there was no basis for suspicion of terrorism, the FBI pulled out of the cases. Local prosecutors announced that they also had no basis for terrorism charges and dropped plans to prosecute within days.