The Federal Trade Commission is cracking down on companies that pitch prepaid phone cards but don’t deliver the advertised minutes because of hidden charges.
The latest target is DR Phone Communications, which advertises prepaid cards used by consumers making calls overseas. Some of the cards, which can be found convenience stores, grocery stores and kiosks, are marketed under names such as “Beautiful Asia,” “Vietnam Best” and “Pearls of Africa.”
The FTC said it purchased 169 of DR Phone’s card and all of them failed to deliver the number of minutes advertised. The agency said the cards on average delivered around 40 percent of the advertised minutes.
Efforts were being made to reach DR Phone and David Rosenthal, who is also mentioned in the complaint, for comment.
While large letters at the top of posters advertising the cards say “No Fees, “No Connection Fee” and “No Maintenance Fee”, the small print at the bottom makes what the FTC calls “vague reference” to fees without disclosing specifics. Sometimes the wording simply says, “International calls made to cellular phones and calls via toll free numbers are billed at higher rate,” the agency said.
DR Phone, which also operates under the name Drphonecom.com,was ordered to halt the alleged illegal practices, which the FTC says violates federal law, until the case is decided in court.
The prepaid phone industry also is trying to address concerns. The American PrePaid Phonecall Association said Wednesday it is finalizing new standards for prepaid phone card providers to make sure all fees and contract terms are disclosed.
“We are adopting this week our first draft of a set of standards that will prevent the kind of marketing that is alleged in [the DR Phone] lawsuit,” said APPPA Chairman Gustavo M. de la Garza.
In February, Millennium Telecard and its affiliates agreed to pay $2.32 million to settle FTC charges that it made false claims to consumers about the number of minutes of talk time their prepaid calling cards would deliver.
The agency advises consumers to do their homework when considering prepaid phone cards. Here is a link to valuable tips.