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I waited in line at the Palo Alto Apple store and was one of the unfortunate folks who was rejected by the AT&T verification check even though I was eligible for an upgrade, owned an original iPhone and am an existing AT&T customer… I was, however, able to fix the situation on the spot. Here’s how:

I had called AT&T a number of times this past week to verify that my account was eligible for the subsidized iPhone price, and every time they said yes, and that I should have no trouble purchasing the new phone at an apple store.

I work at a University and while I do not have an “Enterprise” account, I do have an educational discount applied to my account. (which actually does nothing since the iphone does not qualify for discounts).

Both Apple and AT&T verified that Corporate and Education discounts will not affect your ability to receive the subsidized price, and they will not affect your ability to purchase an iPhone 3g from an Apple store.

Unfortunately the discount caused the Apple Store to reject my purchase and try to send me to an AT&T store. I quickly called “611″ and had the AT&T rep remove the “Educational Discount” from my AT&T account… we tried the purchase again and it worked.

So, to recap: remove any discounts from your AT&T account before trying to buy an iPhone from an Apple store.

I just wanted to pass this along to everybody since there’s probably a lot of pissed off folks out there who are being redirected to an AT&T store after having waited in line at an Apple store, when all they need to do is to remove their business or education discount from their AT&T account. (you can call back tomorrow and add the discount back, or even do it over the internets).

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This “bank” not only does not protect its customers but it creates such narrow definitions of “seller protection” and “buyer protection” that it essentially doesn’t offer any protection at all.

Be prepared, since if you fall victim to an ebay scammer you will also be forced to do battle against and lose money to paypal… you will have sold and shipped your item only to find your money frozen by Paypal, and you will have no recourse to dispute their decisions since they aren’t technically a real bank. Paypal is not a legitimate “financial institution” and so they do not have to follow anyone’s rules but their own.

Use Paypal at your own risk.

History: A number of years ago I got scammed when I sold something on ebay. Yes, I have since learned my lesson. After I shipped the item the buyer reversed charges and paypal froze the money in my account and demanded that I repay them about $400.

At that point I was out not only the item but also $400.

I provided paypal various types of shipping documents but unfortunately I did not track the shipment to their satisfaction and therefore did not fall under their narrow definitions to qualify for “seller protection”.

My paypal account was frozen.

The representatives that I have spoken with have all been completely unhelpful aside from demanding that I pay them $400 and/or contact the scammer in Nigeria to demand that he pay me the money. Neither of those options are going to happen anytime soon.

I asked the representative to escalate me to her manager and the “manager” that I spoke with was as unhelpful and uncaring as any others that I have dealt with at paypal.

I will go out of my way to avoid both paypal and ebay, and recommend everyone that I know to do the same.

It should have been a simple business decision, that it is better for them to “lose” $500 to a scammer rather than try and extort their lost money from a legitimate ebay/paypal user. Instead they will receive nothing but bad press from me. Granted, my voice on the internets is not very loud, but seeing as how this is their standard operating practice they’ll keep pissing people off and losing customers until they understand how to better treat fraud victims.

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