money

Last week, we reported that unlocking your cell phone was going to become illegal in the US on January 26th. And it did. While there are some exceptions to the law— you can still unlock pre-2013 phones—it’s still devastating for cell phone owners.

And it gets worse. According to a new report, the penalty for breaking this new unlocking law is a fine of up to $500,000, 5 years in jail, or both. That’s right, half a million dollars for unlocking your phone. And yes, that includes first-time offenders…

The Atlantic (via iMast777) points to the advisory notice from the Library of Congress:

“IT SHALL HENCEFORCE BE ORDERED THAT AMERICANS SHALL NOT UNLOCK THEIR OWN SMARTPHONES.

PENALTY: In some situations, first time offenders may be fined up to $500,000, imprisoned for five years, or both. For repeat offenders, the maximum penalty increases to a fine of $1,000,000, imprisonment for up to ten years, or both.”

Specifically, this refers to Section 1204 of Public Law 105-304, which says that any person who violates the law willfully and for purposes of commercial advantage or private financial gain will be subject to the aforementioned terms and penalties.

It sounds like this is just talking about the third-party vendors who charge money to unlock phones, but it could easily be argued that this goes for individuals as well. After all, I tend to get $100-$200 more on eBay for an unlocked iPhone vs. a locked one.

As stated previously, there are a few exceptions to the new unlock law. For starters, you could buy an unlocked phone outright from Apple or your carrier. You can also go with a Verizon iPhone 5 because, as we reported, they come unlocked right out of the box.

The big winners here are the carriers, who’ve likely lost millions from folks buying subsidized smartphones, unlocking them and then fleeing. The big losers, well, that would be the third-party unlock vendors who were probably making good money until now.

Wow, I just can’t imagine being fined $500,000 for unlocking a cell phone.