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Prepaid phone card marketers to pay $2.32 million over false claims about total minutes

Consumer Reports News: February 01, 2012 01:38 PM

Several marketers of prepaid calling cards will pay $2.32 million as part of a settlement to resolve charges that they made false claims about the number of minutes on prepaid cards they advertised to immigrant communities, the Federal Trade Commission said today.

The settlement resolves FTC claims brought against defendants Millennium Telecard, Millenium Tele Card, Coleccion Latina, and Telecard Center USA, and their principal Fadi Salim.

The settlement does not constitute an admission by the defendant that the law was violated.

Last May, the FTC filed a complaint in U.S. District Court in New Jersey, charging that the defendants targeted immigrants using calling cards such as Africa Magic, Hola Amigo, and Viva Ecuador. The defendants' prepaid calling cards are sold online, at newsstands, grocery and convenience stores, and kiosks nationwide, in addition to the defendants New Jersey store where they are sold wholesale and retail.

Advertisements (both online and point-of-sale posters) made claims about the number of minutes calling cards provided to locations including Argentina, Brazil, the Dominican Republic, Ecuador, Mexico, Pakistan, Poland, Vietnam, Ghana, Nigeria, and El Salvador. But consumers didn't receive the minutes advertised.

In testing by the FTC, the cards were found to have, on average, only 45 percent of the advertised minutes. Of the 141 cards tested, more than 98 percent failed to deliver the number of minutes advertised on the point-of-sale posters. The FTC also alleged the cards carried hidden fees, such as "hang-up fees" and weekly fees disclosed in tiny print and vague terms difficult to understand in any language.

As part of the settlement, the defendants are also required to "clearly and prominently" disclose fees or charges, and are barred from misrepresenting the amount of time on prepaid cards.

This settlement is part of an ongoing FTC effort to address deceptive advertising and marketing in the prepaid calling card industry.

Prepaid Phone Card Marketers Agree to Pay $2.32 Million to Settle FTC Charges [FTC]

Maggie Shader

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