Sunday, 08 June 2008 00:00

Phone card fees may mislead customers

Written by Nathan Baker
Patricia Breto purchases a phone card from Felix Mendoza. A study has found that the mimutes listed on the phone cards cannot always be taken at face value. Patricia Breto purchases a phone card from Felix Mendoza. A study has found that the mimutes listed on the phone cards cannot always be taken at face value. Nathan Baker

Many immigrants in Erwin use prepaid calling cards to stay in touch with family members in their countries of origin. The cards, found in stores throughout the area, offer rates cheaper than conventional landline long distance calls. Even so, buyers sometimes feel cheated.

“When you buy a card, it never gives you the amount of minutes it said,” Patricia Breto said as she purchased a $3 “Fuerza Mexicana” card at El Corita, a store that sells Hispanic goods on Main Avenue.

“One time I spent $5 on a card and it only gave me one call. I called the customer service number on the card and no one answered. It made me so mad.”

Behind the counter at El Corita, about 40 kinds of multi-colored cards hang on the wall, advertising different prices and minutes.
A rooster looks down from a card called “El Gallo Loco,” promising 170 minutes of call time to Mexico for $10. A green jumping bean in a sombrero on the “Holy Mole” card claims 510 minutes to Mexico for only $3.

Breto has been using international calling cards for 16 years to call her mother and sisters in Culiacán, in the state of Sinaloa, Mexico. She said that the loss of minutes is just something she has learned to live with. Her problems are shared with people across the country who use these types of international calling cards.

A 2007 study by the Hispanic Institute, a Washington-based advocacy group, said that many of the cards offering inexpensive international rates can’t be taken at face value. According to the study, most of them deliver far fewer minutes than advertised, because of hidden charges and connection fees.

“Our studies reveal that the average calling card delivers only 60 percent of the minutes promised,” Gus West, president of the Hispanic Institute, said in a press release. “Hispanics alone lose up to $1 million a day because of fraudulent phone cards.”

Another accusation came from an unlikely source: one of the largest companies selling the cards.

In March 2007, the IDT Corp., which posted $2.2 billion in sales in 2006, launched a civil lawsuit against nine of its rivals alleging that fraud committed by these companies cost consumers money and cut into IDT sales.

“What makes this insidious scheme especially abhorrent is that it preys on a repeated basis on vulnerable segments of the immigrant population, including the Hispanic community,” the IDT complaint alleged.

Three companies – Epana Networks, Dollar Phone and Locus Telecommunications – have settled the lawsuit with IDT and agreed to cease any misleading marketing ploys. The other six companies are fighting the suit, claiming no wrongdoing. The recent complaints lodged against calling card suppliers have prompted government officials in some states to take notice.

Last July, Bill McCollum, Attorney General of Florida, launched an investigation into the marketing practices of calling card providers whose packaging has been called into question as deceptively or deliberately fraudulent.

Part of the investigation focuses on calling cards marketed to people who don’t speak or read English. Results of the investigation have not yet been made public.

If a bill introduced to Congress last August becomes law, calling card purchasers may be protected from false claims. The Calling Card Consumer Protection Act calls for the dollar amount or the amount of minutes on a card to be printed clearly on the packaging in the language predominantly used on the card.

Whether or not the bill becomes a law, companies have begun to change their business practices. “Clean” cards are already reportedly on the streets, to the relief of international callers.

Until all stores are stocked with the new cards, those who have no other means to contact friends and family in other countries, like Breto, are stuck with the old cards.

“I have to call my family in Mexico,” she said. “If that means I have to buy a new card every two weeks, then that’s what I have to do.”

Timeline of calling card legal action

January 2007: IDT, calling card giant, settles $20 million lawsuit with hundreds of customers who claim the company used fraudulent advertising.

March 2007: IDT sues nine of its competitors, claiming fraud costs consumers money and cuts into IDT profits.

July 2007: Florida Attorney General Bill McCollum launches investigation into marketing practices of major calling card companies.

August 2007: H.R. 3402, the Calling Card Consumer Protection Act, is introduced in Congress “to require accurate and reasonable disclosure of the terms and conditions of prepaid telephone calling cards and services.”

First published in El Nuevo Erwin Record

Read 2220 times Last modified on Tuesday, 27 May 2014 21:31