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AT&T Changes Story on iPhones in NYC, Claims Fraud

Already the mighty AT&T PR machine has moved into full deployment over its pulling the option of buying an iPhone from its web site if a customer lives in New York City. And in the process, the carrier continues to prove itself incapable of competently handling its public image.

Currently, new iPhones are not available on AT&T's site for consumers in New York City. As of Sunday, according the story in The Consumerist, an AT&T phone rep admitted that the reason was that "New York is not ready for the iPhone," in the sense that AT&T didn't have enough towers up for coverage. New York and San Francisco have been the two cities with the worst data connectivity for iPhone users.

But as of late Sunday, according to a report by Peter Kafka, AT&T reps were saying that New York City consumers could not buy new iPhones because of "fraud", but that they could by going to a retail store in the Big Apple.

There's actually been a problem in that area with fraud for the iPhone. It's kind of a high-risk area." [AT&T telephone representative] Sean then reassured me that he was "not saying there's bad neighborhoods anywhere. That's not what that means." But he couldn't offer any more details.
Redlining New York over iPhone fraud? It's not unusual for online retailers to flag certain areas as higher risk of fraud because of previous experiences. But what they usually do is implement sophisticated statistical modeling software to give flags for further checking. What the smarter ones don't do is refuse to sell goods, particularly when dealing with the city with the largest population in the United States.

But that's apparently what AT&T does, according to its own explanations. Even though the company sells other expensive smartphones online to New York City dwellers. Kafka's bet was that this was simply a decision that did not get run up the chain of command. Clearly I'm far more cynical, as I suspect it came down from the top. Who else in a corporate environment would take the responsibility to make the single hottest selling item unavailable online in such a large market.

It's not the first time that AT&T stumbled badly in public and then looked even worse as it tried to extricate itself from a pratfall:

  • Multiple consumers have sued AT&T and Apple over iPhone performance in the U.S. that didn't meet the expectations set by advertisements. AT&T managed to do nothing.
  • There was the general finger-pointing when it came to Apple not allowing Google Voice into the app store.
  • After Verizon smacked the carrier around in its ads, AT&T decided to sue, literally increasing the effectiveness of the marketing attack.
  • After all that time touting the ability to download apps and surf the web with an iPhone, AT&T decided that users mistakenly thought that an unlimited data plan was actually unlimited, and so decided to discourage mobile data use.
  • When I picked up on ZDNet's Sam Diaz and his observation that perhaps Apple's home ground of Cupertino didn't have full 3G service when the iPhone 3G came out, I went multiple rounds with AT&T press people who ultimately ended up noting that it had 3G service on one frequency, but only added the second frequency in December 2008. In other words, the full 3G service, which in the U.S. really should have both frequency bands, wasn't there until late 2008, after the iPhone 3G was out.
And now we've got AT&T essentially saying that New Yorkers can't be trusted to buy online. I know they'll say that's not what they meant, but it's what comes across. Public perception: that's the subject of PR. AT&T seems pretty bad at it.
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