Court prevents SIM swap victim from suing his carrier over $60K crypto theft

We've been hearing more and more about SIM swaps and how they can wipe out your financial accounts in a heartbeat. Sepehr Tahmasebpour was a customer of Canadian wireless firm Freedom Mobile and he was about to learn that scams like SIM swaps can cross the border very easily. Tahmasebpour claims that Freedom Mobile turned over a new SIM card to someone who was impersonating his father who is actually the person responsible for paying the invoice each month.

The wireless firm turned over the SIM card to a participant in the scam back in January 2021 and this criminal used the card to get into Tahmasebpour's email app, lock him out of his accounts, and steal $60,000 worth of bitcoins from his crypto wallet. In a January 2023 court filing, Tahmasebpour wrote, "This was caused by the grossly negligent actions and inactions of Freedom," which would seem to make sense since it issued the SIM card.

There are two ways that fake SIM cards get handed out. One, the thief has paid off someone working for the wireless firm to hand over new SIM cards to a person involved in the scam. This is why T-Mobile and every wireless consumer should have been alarmed when T-Mobile employees received unsolicited text messages offering them $300 for each SIM swap they help slide through the carrier's system.

The second way is for someone involved in the criminal enterprise to pretend to be the person who owns the account and request a new SIM card from a company employee. A bored or lazy employee might not bother to ask for ID to verify the identity of this person. Regardless of which method is used by a criminal to improperly obtain a SIM card that is subsequently used to steal financial assets, the wireless company issuing the SIM card would seem to have some responsibility.

In its court filing, Tahmasebpour and his dad argued that Freedom Mobile should be on the hook for more than $63,000 to make up for the value of the stolen bitcoin, legal fees, and punitive damages. The claim pointed out that prior news coverage and police warnings should have made Freedom Mobile wary and more alert about SIM swaps. "Despite Freedom being armed with this knowledge, it failed to take reasonable and necessary steps to prevent a similar type of attack from occurring," read the Tahmasebpour's complaint.

According to CBC News, Freedom Mobile was able to get a British Columbia court to stay the case stating that the victim had to first resolve the matter through the arbitration process laid out by the carrier's terms of service. Despite both father and son stating that Freedom never showed them the arbitration clause, the court issued a stay preventing the plaintiffs from getting reimbursed through the courts for any of the funds they lost due to Freedom Mobile's negligence.

And make no mistake about it, the judge did believe that the wireless provider did not go out of its way to point out the arbitration clause before the incident took place. "Nevertheless, the evidence that I do have on this application does not persuade me that Freedom Mobile specifically drew either plaintiff's attention to the arbitration clause at any time," said the judge.

Here's exactly how the SIM swap went down according to Sepehr Tahmasebpour. On January 4th, 2021, he was skiing with a friend when he received two texts from Freedom Mobile stating that his email address and PIN had been changed. All of the phones on the account immediately lost service. He went to a Freedom Mobile retail store to complain, and called them on a phone owned by a relative who was not affected by the SIM swap. He also called the police.

Sepehr says that the next day "someone withdrew the entire balance of my bitcoin, after resetting my password to my email address, and then my password to my Shakepay [cryptocurrency] account." Believe it or not, even after access to Freedom Mobile's network had been cut off following the SIM swap, the wireless firm continued to bill Tahmasebpour's father for service and hired a collections agency when the family would not pay.

All we can suggest is that you must be hyper-vigilant when it comes to your wireless account. If you receive a text or email about a change in email address or PIN, or receive a notification about a new SIM card and you didn't request one, call your carrier immediately. Usually the next thing that happens is that your phone loses service so you need to realize that time is of the essence if this should happen to you.