The Prepaid Press - November 15, 2007 - (Page 9)

GENERAL PREPAID November 15 · 2007 - 9 by Michael S. Glassner Senior Vice President for External Affairs, IDT Corp. GUEST EDITORIAL program their platforms to actually deliver the minutes they promise to consumers. Calling card companies that do not deliver honest minutes stand at a crossroad. If they continue down the road of promising minutes that they have programmed their platforms not to deliver, they risk severe consequences. If they adopt a policy of honest minutes, they not only protect themselves, but strengthen and repair the reputation of the industry. If the prepaid calling card industry does not solve its own problems, it will have solutions foisted upon it. Industry leaders should promote an industry association -- founded on the principal of honest minutes -- that can exert effective self regulation. As Bob Dylan urged: “Your old road is Rapidly aging. Please get out of the new one If you can’t lend your hand For the times they are a-changing.” Michael S. Glassner is Senior Vice President for External Affairs, IDT Corp. Visit IDT online at www.idt.net. This is a guest editorial. The Prepaid Press, as a news publication, strives to present all sides of issues that impact the industry. We invite anyone interested in contributing to contact us at editor@prepaid-press.com. We reserve the right to accept or reject any submissions at our sole discretion. The opinions expressed in this column are those of the author and do not necessarily represent the opinions of TPP or its management. Honest Minutes: “The Times They Are A-Changing” fanfare, the California Attorney General and Public Utilities Commission successfully prosecuted a consumer fraud case earlier this year against a prepaid calling card company that allegedly was promising minutes to consumers greater than its platform was programmed to deliver -- Devine Communications. People v. Devine Communications, Inc., No. CGC07-462325 (Cal. Super. Ct., Apr. 13, 2007), available at http://www.sftc.org. Sanctions imposed against Devine included a $118,000 penalty. In recent months, calling card companies have received subpoenas from other Attorney Generals and regulators across the nation. Federal and state legislation has been introduced to address calling card fraud. Calling card executives who ignore this activity are like the captain of the Titanic ignoring the tip of an iceberg in the distance. Many new entrants into the industry justify the practice of promising minutes they have no intention of delivering by claiming that they are following the lead of established companies in the industry. Companies who justify their failure to offer honest minutes with the lemming defense – I did it because everyone else was doing it – should not be surprised when Attorney Generals and regulators reject their excuses. IDT Telecom instigated a lawsuit earlier this year in an attempt to force the industry to join honest providers in offering honest minutes when it ﬁled suit against six other major calling card companies earlier this year. That suit seeks, along with money damages, an order requiring the defendants to program their platforms to actually deliver the minutes they promise to consumers in voice prompt, poster, radio, television and print advertising. In other words, the suit seeks an order requiring companies to deliver honest minutes. In ruling on a preliminary injunction sought by IDT Telecom, the Court stated that it was “not that troubled” with ﬁnding likelihood of success on the merits on IDT Telecom’s claim that the failure to deliver honest minutes violates the Lanham Act and various state deceptive practices statutes. Although the Court denied IDT Telecom’s preliminary injunction application, ﬁnding, among other things, that IDT could be adequately compensated by money damages, it made this further ﬁnding: “It appears that this in an area of very unique pricing or creative pricing that takes place, and it is very disconcerting to the Court because the Court -- I -- understand who the users are, and you know the people that primarily use these cards are people that don’t have a lot of money. . . . And without question, there is an issue here that needs to be addressed.” It appears from the activity of the Attorney Generals, regulators and legislators that they have responded to the Court’s call for action on this issue. Some have sought to minimize the signiﬁcance of IDT’s lawsuit, and the importance of delivering honest minutes. They claim that this lawsuit is merely an attempt by IDT to impose on others business practices that were imposed on IDT after a class action settlement last year. This claim is false. Nowhere does the class action settlement suggest that IDT was not delivering honest minutes. The business practice changes to which IDT agreed are neither related to the lawsuit nor likely to cause IDT to launch costly and extensive litigation in order to, as the article put it, make sure that the other providers “shared in its pain.” A review of the class action settlement shows that those practices consist of exactly three changes in IDT’s disclosures: 1. Recharacterize its “bimonthly” service charge as an “every 14 days” service charge. 2. Change its disclosure that “Toll free access billed at higher rate.” to “Calls made from toll free access are billed at higher per minute rate.” 3. Add disclosure language stating that Customer Service may be contacted for rates and fees information. While it is always possible to reﬁne disclosure language, none of this has anything to do with the issue at hand: requiring companies to In his rallying cry of a generation ago, Bob Dylan warned that: “he that gets hurt, will be he who has stalled; there’s a battle outside and it is raging.” Prepaid calling card industry executives should heed this warning as they consider a trend that is transforming the industry: honest minutes. Honest minutes should not be controversial. If a calling card company promises minutes of talk time to consumers in its voice prompts, posters, radio, television, or print advertising for a call to a particular destination, it should program its platform to actually deliver those minutes. This is what honest providers do. Unfortunately, honest communication is a skill that many companies in this industry need to learn. In recent years, several prepaid calling card companies have grown rapidly, and taken market share from established companies offering honest minutes, by promising consumers an extravagant number of communications minutes to popular destinations when their platforms were programmed to deliver signiﬁcantly less than the promised minutes to consumers. The results of testing performed to measure the ability of popular cards to deliver the minutes promised can be viewed on the web site: www. compareyourcard.com. This practice of promising consumers a higher number of minutes than can be delivered cheats consumers, many of whom are vulnerable recent immigrants. This practice also inﬂicts ongoing damage on the reputation of the industry, which harms the honest provider twice over. Not only do consumers buy the cards that promise the most minutes, but when those cards don’t deliver, the consumer loses conﬁdence in the industry, mistakenly believing that all providers are the same. The investigation of the Florida Attorney General has generated substantial attention to this problem -- not just in industry publications but also in the popular media. But the Florida Attorney General is not the only regulatory authority investigating the industry. With less http://www.sftc.org http://www.idt.net http://www.pentagon.ca http://www.compareyourcard.com http://www.compareyourcard.com http://www.pentagon.ca

Table of Contents Feed for the Digital Edition of The Prepaid Press - November 15, 2007

The Prepaid Press - November 15, 2007 Online Wireless Recharge It's a Wrap for Gift Cards Contents GENERAL PREPAID Prepaid 101: Merchandising Regulatory Rundown: Wireless Broadband, LNP, Internet Taxes, and Stored Value Legislation Guest Editorial: Honest Minutes: "The Times They Are A-Changing" 5 Minutes With Daniel Neal, CEO of kajeet The Legal Line Prepaid Wireless Roundup WIRELESS Wireless in Brief 011 Mobile Launches Mobile International Dialing Hop-on Adds GSM Phone to Product Line Virgin Mobile USA Launches New Services kajeet Adds to Handset Line MarketStar Publishes Mobile Phone Usage Study Nokia and Cellfire Team Up Verizon Selects Firethorn iVisionMobile Launches Messaging Platform Sprint Expands "Unlimited by Boost" INTERNATIONAL Spot Rates NOMAD Brings MasterCard EMS to Europe R&M Finds Potential in Africa International in Brief TELECOM & TECHNOLOGY Caveat Emptor When Negotiating IP Licensing T&T in Brief MySpace and Skype Ink Deal Octastic Announces New Media Gateway DSP Pactolus Selected by Global Crossing Tadiran Announces New Loyalty Incentive Program Oblio Telecom Launches New Prepaid Products Total Call Enhances Prepaid Calling Cards PAYMENTS A Gift Card Technology Guide Pinnacle and PaySpot Roll Out POS/Prepaid Solution TIO Networks Announces Membership Program TransFund$ Partners with TruckersB2B AMR Finds Retailers Returning to Main Street Payments in Brief Diebold to Offer Prepaid Gift Card Technology InComm to Sell nFinanSe Discover Cards iVisionMobile Offers Retailers Mobile Payments i2c to Offer Stored Value Webinars Mobilians Starts U.S. Mobile Payments Operation NetSpend Increases Savings Program Interest EXTRAS Classifieds Contact Us Our Advertisers

The Prepaid Press - November 15, 2007

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