Consumers – including military personnel and new immigrants – are increasingly falling prey to deceptive marketing practices by issuers of prepaid phone cards, the Federal Trade Commission told a House panel today.
The FTC is seeking more legal muscle to crack down, via hefty judgements, against the prepaid card companies that promise many more minutes than their cards actually deliver.
“Prepaid calling cards can serve as a convenient and inexpensive lifeline to connect consumers – particularly recent immigrants as well as members of the U.S. armed services – to their families,” Lois Greisman, associate director of the FTC’s Division of Marketing Practices, told the U.S. House Subcommittee on Commerce, Trade and Consumer Protection. “Such cards are typically sold in gas stations, newsstands, convenience stores, bodegas, groceries, military PX’s, as well as over the Internet.”
But the purchasers of prepaid calling cards “often receive only a fraction of the advertised number of calling minutes and are charged a welter of hefty and confusing fees and surcharges that are undisclosed or inadequately disclosed,” Greisman said.
Greisman reiterated the FTC’s backing of pending House legislation, the Prepaid Calling Card Consumer Protection Act, which would require prepaid calling card providers and distributors to provide better disclosures to consumers.
The legislation would partially repeal the “common carrier exemption” and give the FTC the authority to “sue both prepaid telecommunications service providers and distributors, as well as the power to fine companies that violate the proposed la,” Greisman said.
“These new tools would assist the FTC’s efforts to crack down on the deceptive marketing of prepaid calling cards,” Greisman told the panel.
In the fall of 2007, the FTC established a joint federal-state task force to combat deceptive marketing practices in the prepaid calling card industry. The task force members include representatives from the offices of more than 35 state attorneys general and other state and local agencies, and the Federal Communications Commission.
Collectively, states authorities have brought over 20 enforcement actions against prepaid calling card companies for allegedly deceptive marketing practices.
See the FTC’s special web page:
Buying Time: The Facts About Pre-Paid Phone Cards