Over the past decade, the prepaid calling card business has mushroomed into a $4 billion industry. It has injected new competition into the market for international phone calls. The cards are sold in gas stations, newsstands, convenience stores, bodegas and groceries across the country. But consumer watchdogs and government officials warn that certain segments of the market are plagued by fraud and deceptive practices that give consumers fewer minutes than they pay for and tack on all sorts of hidden and unfair “junk fees.” The problem takes many forms:
• connection fees on calls that don’t go through because no one is home or the line is busy;
• post-call service fees and 99-cent hang-up fees on cards that are only worth a few dollars to start with;
• calling rates that go up when a card is used more than once; activation and weekly maintenance fees; and
• cards that bill customers in three- or four-minute increments even if they use just a few seconds of calling time.
These charges and fees often end up leaving buyers with far fewer minutes for calls than they thought they were getting. The Hispanic Institute, a nonprofit advocacy group, estimates that the average calling card delivers only 60% of the minutes promised ‘ cheating consumers out of $1 million a day. Government officials are starting to force card providers to be more upfront about their card terms. But some consumer advocates worry that better disclosure alone is not enough to protect customers.
Victims include soldiers calling home from abroad and foreign students studying in this country. But the people most vulnerable to these scams, consumer advocates and government officials say, are the newest arrivals who speak little English and don’t have the money or documentation to get a home phone line or cellphone ‘ much less a computer ‘ to communicate with relatives overseas. They are also the people who are least likely to seek redress if they are cheated.
One thing that particularly disturbs industry critics is that many prepaid calling card companies advertise in Spanish, but provide disclosures of card terms and conditions in English only ‘ if at all. The Federal Trade Commission and attorneys general in Florida, Texas and a handful of other states have cracked down on bad actors in the market, while state and federal lawmakers have begun to craft regulations to clean up the industry. It’s the government’s responsibility to protect the most vulnerable among us who are being taken advantage of by these fly-by-night operators.
Senator Bill Nelson (D-FL) is sponsoring a bill that would force prepaid calling card companies to clearly disclose the number of minutes that their cards provide as well as any fees and charges. The House has passed similar legislation. But while both measures are an important first step, Sally Greenberg, executive director of the National Consumers League, noted that neither prohibits most “unconscionable” industry practices. She says: “Disclosure only goes so far and these are primarily disclosure bills. It doesn’t help the consumer to tell them we are ripping them off.”
Consumer advocates say the prepaid calling card market has become ripe for abuse because there has been so little industry regulation ‘ and so little enforcement of the rules that do exist. Ms. Greenberg from the consumer group said: “The problem is that these companies can set whatever terms they want. It’s a free-for-all, a Wild West.” Also, con artists face a low barrier to enter the market since calling card providers do not need to own their own telecommunications networks.
Source: USA Today
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