A new company, FreeiPhoneSwap.com, announced Tuesday it will pay cash for old Apple iPhone 2Gs, in most cases enough for the customer to pay for a new iPhone 3G. However, there are some catches.

TMO spoke with spokesperson Sam Hickson about the process. Customers can either take their old iPhone 2G into one of the FreeiPhoneSwap.com locations in Miami, New York or Atlanta or mail their iPhone to the address provided on the Website. FreeiPhoneSwap.com will pay US$100 for a 4GB, $200 for an 8GB and $300 for a 16GB.

If the customer goes to one of the physical locations, their PayPal account will be credited immediately. Otherwise, a check will be mailed in two to three business days. That same delay applies to an iPhone mailed in.

TMO asked about the trust issue associated with turning a valuable iPhone over to a new company and waiting for a check. Mr. Hickson stated that they are keenly aware of that issue, have some customer testimonials to offer, and will be updating the company’s Website to provide answers customers may have about the process.

Mr. Hickson noted that they are not an certified Apple reseller.

Previously, AT&T told TMO that physical possession of the old iPhone 2G is not required to purchase an iPhone 3G and update the contract. Accordingly, customers can take the cash they get from FreeiPhoneSwap.com, buy a new iPhone 3G, enter a new contract, and their service will be transferred to the new iPhone. The old iPhone then becomes inactive on the AT&T network.

FreeiPhoneSwap.com doesn’t try to refurbish the old iPhones, and they are subsequently sold "as is" according to Mr. Hickson.

TMO notes that Apple customers should be aware that the value of an iPhone 2G, not under contract and eligible to be unlocked, varies and it would be wise to compare prices on eBay to assess whether they’re getting the desired price for their old iPhone from Freeiphoneswap.com.