The Federal Trade Commission has settled with a third pre-paid calling card company in an ongoing crackdown, bringing to $4 million the total amount such firms have paid in response to charges of making false claims and not properly disclosing “maintenance” and other fees.
The newest settlement stems from the FTC’s July 2009 complaint against New York-based Diamond Phone Card. The federal agency said Diamond made false statements about the number of minutes its cards delivered and charged “hidden fees.”
The FTC said its testing showed that consumers received only about half the advertised minutes from Diamond’s pre-paid calling cards.
“Unlike Diamond Phone’s ads, the FTC’s message here is clear,” said FTC Chairman Jon Leibowitz. “If you deceive consumers about the prepaid calling cards you’re selling, we will take you to court and force you to give up the money you made through deceptive sales tactics.”
The agreement with Diamond Phone Card requires its principals to pay $500,000, and bars them from misleading consumers about talk time provided. It also requires Diamond to clearly disclose – “in the same language they are marketed” – all fees tied to the cards.
The complaint named the company and its principals, Nasreen Gilani, Samsuddin Panjawani, and Faiez Farishta. The FTC alleged that they marketed calling cards to recent immigrants for calls to several foreign countries, including the Dominican Republic, El Salvador, Mexico, India, Pakistan, and Guatemala.
The FTC has established a joint federal-state task force in 2007 to deal with deceptive marketing practices in the prepaid calling card industry.
