The Prepaid Press - April 15, 2008 - (Page 18)

CALLING CARDS April 15 · 2008 - 18 FTC Asks Court to Halt Prepaid Calling Card Scam Alleges Consumers Receive Fewer Minutes Than Advertised By Gene Retske or not the calls go through, and charges hidden fees. According to the FTC, CTA is a key player in the prepaid phone card industry that sells approximately $4 billion worth of cards a year – primarily to immigrants looking for a cheap and easy way to call friends and family in other countries. CTA sells cards in denominations ranging from $2 to $20 under various brand names, and has cards for use in calling countries from Albania to Zimbabwe and hundreds of countries in between. They also sell cards for domestic calling. The FTC charged that CTA provides posters to the small retail outlets like gas stations, grocery stores and newstands that sell its cards. The posters advertise the number of calling minutes and brag it offers rates with “no connection fees.” But consumers who use the calling cards don’t receive the number of minutes advertised. For example, the FTC complaint says a card that advertised 40 minutes calling time to El Salvador cut off the call after only 27 minutes. A card that advertised 30 minutes calling time to Egypt cut off the call in a little over 10 minutes. In fact, the FTC purchased 46 CTA cards in retail stores and tested them. None of the cards delivered the calling minutes advertised by posters displayed where the cards were purchased. CTA posters and calling cards refer to charges in vague terms and tiny type. Posters that feature country names and call minutes in 32 point type identified fees and charges at the bottom of the poster in approximately five point type, using language such as: “Call time is deducted in three minute increments to certain destinations. Service fees may apply. Calls placed to mobile telephones may be billed at a higher rate. When using a toll free number from a pay phone a $.65 per call surcharge will apply. Application of surcharges and fees may have an effect of reducing total minutes on a card. Maintenance fees may apply. This card has no cash value and is non-refundable. Prices and fees are subject to change without notice.” The calling cards themselves carried approximately 27 lines of disclosures regarding fees and charges, which are nearly illegible because the disclosures are written in font sizes that range from two to four points, the complaint states. The disclosure states, in part, “All rates and fees vary and are subject to change without notice. Rates are higher for international cellular . . . Calls are billed in three to six minute increments. A post call fee between 25 cents and two dollars and an additional surcharge of twenty percent may apply after each call depending on length and duration of a call. . . . Service fees may apply.” Neither the advertising posters nor the calling cards disclose that if the calls do not go through, the cards are charged fees anyway. The FTC has asked the court to halt the deceptive practices pending trial, and to appoint a monitor to oversee the business. The agency also will seek a court order to require the defendants to give up their ill-gotten gains. The FTC complaint named Clifton Telecard Alliance One LLC, doing business as Clifton Telecard Alliance and CTA, Inc., and Mustafa Qattous, its principal. The Commission vote to file the complaint was 5-0. It was filed in the U.S. District Court for the District of New Jersey. This case was brought with the assistance of El Salvador’s Defensoría del Consumidor, Colombia’s Superintendencia de Industria y Comercio, the Egypt Consumer Protection Authority, Mexico’s Procuraduría Federal del Consumidor (PROFECO), Panama’s Autoridad de Protección al Consumidor y Defensa de la Competencia, and Peru’s Instituto Nacional de Defensa de la Competencia y de la Protección de la Propiedad Intelectual (INDECOPI). NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint. shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://ftc.gov/ bcp/consumer.shtm. The Federal Trade Commission has asked a U.S. district court judge to order a halt to the alleged illegal practices of CTA, a major distributor of prepaid calling cards across the country. In the last quarter of 2007 alone, CTA’s revenue from the sale of cards exceeded $28 million. The FTC charges that CTA misrepresents the number of calling minutes consumers get, fails to disclose that consumers’ cards will be charged whether Louisana Community Mulls Tax on Prepaid Cards St. Tammany Parrish Considers Tax for 911 ST. TAMMANY, LA (March 17, 2008) The St. Tammany Parrish Communications District in Louisiana is pushing for legislation that would impose a tax of 1.7% on prepaid calling cards sold in the Parrish , according to an article in the St. Tammany News. The tax would be collected when the cards are sold. Losing an estimated $200,000 a year, the St. Tammany Parish Communications District is rallying for legislative action to collect taxes on prepaid phone cards that fund local 911 communication systems. Across the state, 911 communication syste m s c u r re nt l y operate on taxes collected ever y month from cell phone and phone lines, with fees between 85 cents and $1, respectively, per month. But the tax has never been declared on prepaid phone cards, causing 911 communication systems across the state to lose potential revenue. In St. Tammany, officials estimate the loss between $200,000 and $250,000 a year, critical money needed to improve emergency communication systems, said H.W. “Woody” Glover Jr, director of St. Tammany Parish Communications District, otherwise known as the 911 communication district. “We’ll have to taper off a lot of projects,” Glover said, referring to, among other cuts, a parishwide communication system upgrade for fire dispatchers. “We’re going to have to cut back programs.” Glover, along with chairman Tom Buell and other board members, said they are working with Sen. Edwin Murray of New Orleans to write a bill requiring prepaid carriers to pay the tax. Murray was in special session this week and did not return a phone call seeking comment. A check of recently filed bills by Murray produced no such similar bill filed in advance of the regular legislative session this spring. Both Glover and Buell were also unaware if any such bill had been written. If and when a bill is filed, Buell expects a backlash from prepaid cellular companies, whose deep pockets may bring legal fights to court or unleash well-healed lobbyists arguing against any such tax. The opposition’s argument, Buell said, is it’s impossible to track where the cards are used, a fact crucial to Pactolus Wins VON Magazine Award RapidFLEX Selected for Innovation MARLBOROUGH, MA. (March 5, 2008) Pactolus Communications received a 2008 VON Magazine Innovator Award for innovative companies driving the Internet Communications industry. Pactolus was selected for its RapidFLEX Service Creation Environment (SCE) and Service Delivery Platform (SDP), which automatically protect the performance, scalability and resiliency of advanced carrier services, and cut the costs and time required for service creation and deployment. Global Crossing recently used Pactolus for its first IP service application, based on Pactolus’ SIPware Event Conferencing and the RapidFLEX platforms. “Pactolus’ innovative architecture frees integrators, Tier 1’s and innovative service providers to create and introduce new services. VON Magazine’s Innovator Awards recognize the Internet Communications industry’s best and brightest companies, and we’re pleased to include Pactolus Communications as an inaugural winner,” said Bill Sell, Publisher, VON Media Group. “We’re truly honored by this recognition of our commitment to fostering innovation and subscriber growth among service providers, integrators, enterprises and new media companies,” concluded Pactolus Founder and CTO David Horton. Source: Pactolus Communications (www.pactolus.com) iBasis Lowers Pakistan Rate For Pingo Prepaid Customers Get 30 Percent Reduction BURLINGTON, MA (March 10, 2008) iBasis reduced the rate to Pakistan for its Pingo online calling service by more than 30 percent. The company said the lower rate was made possible by a Pingo feature that actively searches for opportunities to reduce costs. Pingo has also announced that new subscribers can get a hundred free minutes of calling to Pakistan by registering through the www.pingopakistan.com page. Pingo offers prepaid international and long distance calling without any contractual obligation. The service can be used with both fixedline and mobile phones without additional equipment or software downloads. Pingo minutes can be purchased online with credit/debit cards and PayPal. The Pingo that includes automated voice prompts in five languages. Accounts can be set-up to automatically recharge at a predetermined balance, or, an interactive voice response system can be used to alert customers of a low balance, allowing funds to be replenished easily. Once mobile and/or fixed-line phones have been registered online, enhanced speed dialing enables customers to call a local Pingo access number and press a designated speed-dial number f http://www.ftc.gov/ftc/complaint.shtm http://www.ftc.gov/ftc/complaint.shtm http://ftc.gov/bcp/consumer.shtm http://ftc.gov/bcp/consumer.shtm http://www.pactolus.com http://www.pingopakistan.com http://www.ibasis.net

Table of Contents Feed for the Digital Edition of The Prepaid Press - April 15, 2008

The Prepaid Press - April 15, 2008 Motorola to Split Mobile Payments: The Saga Continues Contents The Retske Report: Election Year and Woody Hayes Regulatory Rundown: 2008 First Quarter Mobile Update 5 Minutes with Mark Herrington tppEXPO’08 Spotlight New Handsets Announced at CTIA Prepaid Wireless in Brief Prepaid Wireless Roundup Virgin Mobile Reports Earnings of 6 Cents Movida Files Chapter 11 LiveWire Mobile Acquires Groove Mobile Boost Selects Vesta for Transactions RadioShack to Offer Trumpet Mobile Service Virgin Offers New Pay as You Go Plans Book Review: Webster’s New World Telecom Dictionary Management Changes at IDT Spot Rates Calling Cards in Brief The State of Prepaid Technology: Productive Coexistence FTC Asks Court to Halt Prepaid Calling Card Scam Louisiana Community Mulls Tax on Prepaid Cards Pactolus Wins VON Magazine Award iBasis Lowers Pakistan Rate for Pingo The Legal Line Biometric Update: Keep Your Shirt On AccountNow Ends Upfront Fees Evolution Benefits Acquires SmartFlex Payments in Brief NetSpend to Offer Bill Payment and Top-up Union Bank Introduces Contactless Card Ingenico Announces Development Kit Prepaid 101: Stupid Card Tricks PLS Offering Walk-In Bill Payment Spend Gift Cards ASAP Credit Card Breach at Hannaford Bros. NACS Withdraws Opposition to Tobacco Bill Study Finds Gift Card Packaging Increases Sales NACS Names International VP Inflatable Display Provides Inexpensive Signage Retail Focus in Brief Our Advertisers Contact Us

The Prepaid Press - April 15, 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.