The Prepaid Press - June 15, 2008 - (Page 6)

PREPAID BUSINESS June 15 · 2008 - 6 REGULATORy RUNDOWN by Ed Maldonado June 2008 1. The CPNI “Traffic Stop:” FCC Enforcement develops 2. Round-Up of False Advertising and Unfair Trade Practice Investigation and Actions 3. Just a Bill sitting on Capitol Hill 4. New “Prepaid” Deceptive Trade Practice Lawsuit filed by Texas Attorney General 5. Slow rolling investigation of Prepaid Calling Cards continues to brew in California 1. The CPNI “Traffic Stop”: FCC Enforcement develops WASHINGTON, DC (May 2, 2008) In an unprecedented move, the Federal Communications Commission Enforcement Bureau has rescinded an Order and Forfeiture of $4,000.00 for apparent customer proprietary network information violations against a common carrier, Habla Communicaciones, Inc. (EB-06-TC-4521). Habla was The California PUC seems to be pursuing investigations based upon consumer complaints. initially fined for its apparent willful and repeated violation of a Commission order for failure to respond to a directive of the Enforcement Bureau to provide certain information and documents related to the Bureau’s investigations into carrier protection of customer proprietary network information. Habla never filed a response to the FCC in relation to the violation causing the FCC to contact the Texas Public Utilities Commission to verify the status of Habla. The Texas PUC confirmed that the company had ceased its operations. Without exonerating Habla for its apparent violation of a Commission order, and presumably the fine, the FCC found cause to rescind the order based upon the added costs of prosecuting for the forfeiture with “no reasonable hope of recovery.” It is uncertain whether the FCC will now advance against the individual owners of Habla, as a part of liabilities under corporate wind-down. The rescission of this order should provide common carriers insight into how the FCC’s Enforcement Bureau will be prosecuting future violations. First, the FCC Enforcement Bureau is clearly cross-checking state and local information sources as a part of enforcement. This is important, as the primary method that the FCC has for verifying whether authorized Section 214 common carriers are active is the quarterly and annual compliance reporting mandated by rules and statutes. Failure to file and respond may become the triggering event for future enforcement actions, causing the FCC to review common carriers should they miss their regularly due filings. Second, there is no final exoneration for violations and forfeitures. The question remains open as to whether the owners of the carrier will now be liable. The FCC may require owners of a carrier who owes fines, and who are seeking new Section 214 Authority, to pay the entire forfeiture amount prior to being approved for a new license. Third, the FCC is evaluating prosecution costs and fine recovery as a part of their efforts to enforce CPNI and possibly other regulatory fees and requirements. end pending squabbles over legal jurisdiction. 2. Round-Up of False Advertising and Unfair Trade Practice Investigation and Actions Although not technically “regulatory,” recent investigations by State Attorneys General under Deceptive Trade Practice statutes have caused the prepaid calling card industry to keep a watchful eye on the progress of these cases. While a painful process for all those involved, the process may actually be generating clearer standards that prepaid calling card providers can anticipate and integrate on a going forward basis. 3. Just a Bill sitting on Capitol Hill WASHINGTON, DC (May 29, 2008 - United States House of Representatives) The H.R. 3402 (Calling Card Consumer Protection Act) has remained in legislative limbo since its introduction on August 3, 2007. While the next natural step in the legislative process would be to schedule the Bill for committee debate, no such action has occurred and there is little indication that it will. The Bill calls for the Federal Trade Commission (FTC) to have statutory authority over the practices of prepaid calling cards and the associated advertisements used to attract consumers. The Bill attracted considerable industry and media attention since its introduction in the third quarter of 2007, but has languished ever since. This may be due, in part, to the fact that the FTC has already concluded that it has sufficient administrative authority to justify investigations and lawsuits against prepaid calling card companies and distributors. This assumption was evident in its recent case against Clifton Telecard Alliance (CTA) in 2008 under Civil Action No.: 08-cv-1480. The larger question is whether H.R. 3402 is a Bill of substance, or simply another attempt to draw short-term media attention to our elected officials in Congress. While many State Attorneys General have rallied around the pending Bill as an indicator of an implicit Congressional basis for their investigations and consumer actions, Congress seems intentionally silent, perhaps because this is an election year. In the interim, industry players are confused and cautious. The Bill is relevant to the prepaid calling card industry, as it would set clear and conspicuous guidelines as to who should make the rules and enforce disclosures and advertising within the prepaid industry – the FCC, the FTC, the State PUCs or the State Attorneys General. To date, this is unclear and has left state laws (which vary by state) to supplement and fill in the gaps of what is specifically required in such disclosures and advertisements. This has also placed State Attorneys General on the front line of these cases. In their defense, prepaid providers have often challenged the applicability of state law and jurisdiction, causing friction between themselves and the local Attorney General offices in the investigative process. Congress needs to move on this soon as passage, or defeat. H.R. 3402 is important to both industry players and regulators to 4. New “Prepaid” Deceptive Trade Practice Lawsuit filed by Texas Attorney General AUSTIN, TX (May 28 2008) Texas Attorney General Greg Abbott has filed an enforcement action against Next-G Communication, Inc., a prepaid calling card provider who produces, sells and distributes cards within the state of Texas. The action alleges that Next-G Communications has consistently failed to deliver the number of minutes it advertises to customers. The suit is a first for Texas and is pursuant to a joint investigation between the Texas Attorney General and the Public Utility Commission (PUC), which directly regulates prepaid calling card services. The joint investigation concluded that Next-G Communications’ prepaid calling cards consistently delivered only 40 percent of the minutes claimed on the defendants’ advertising posters, confirmed by Next-G’s voice prompt given at the beginning of each call. The suit seeks both a temporary and permanent injunction against Next-G Communication’s alleged deceptive marketing claims and carries with it civil penalties of up to $20,000 per violation of the Texas Deceptive Trade Practices Act. It is uncertain whether other calling card companies are also under investigation, or if more actions are to follow. 5. Slow rolling investigation of Prepaid Calling Cards continues to brew in California SAN FRANCISCO, CA (May 29, 2008) The California Public Utilities Commission and the Attorney General continue to investigate calling cards in the California market. The investigation appears to be ongoing as a result of the April 17, 2008 judgment of the Superior Court of California against California prepaid calling card companies Devine Communications, Inc. and Megalink Telecom, Inc. The order required the companies to clearly and conspicuously disclose all fees, surcharges, and maintenance fees associated with their prepaid calling cards, and prohibits misleading advertising. In that case, the Superior Court awarded civil penalties in the amount of $118,000 against Devine & Megalink, who marketed and distributed prepaid calling cards and prepaid calling services in California and several other states, targeted at Filipino consumers. The California PUC seems to be pursuing investigations based upon consumer complaints. Earlier in 2008, the PUC sent notices of “Providing Unlicensed Telecommunication Services” to numerous providers it believed to be selling prepaid calling services without first obtaining Certification for Public Necessity and Convenience (CPCN). It is unclear whether this was a proactive move based upon information supplied by the market or the direct result of consumer complaints. Based upon the successful joint California PUC and Attorney General judgment against Devine & Megalink, all ethic niche providers will be wise to check their compliance in California. Edward Maldonado is a telecommunication regulatory attorney and consultant. He can be reached at eam@maldonado-group.com. http://www.allstateprinting.com http://www.allstateprinting.com

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

The Prepaid Press - June 15, 2008 Contents The Retske Report: The More Things Change… Regulatory Rundown: June 2008 5 Minutes With Harvey Caron VP/Marketing Director, Pentagon Graphics TPPExpo’08 Spotlight Handset Trafficking Dealt Blow Prepaid Wireless Roundup Virgin Mobile to Use Platform-A Sprint Reports Lower Wireless Revenues Virgin Mobile Adds Samsung to Offerings States Considering Photo ID for Prepaid Wireless Prepaid Reviews Podcast Includes TPP Editor Prepaid Wireless in Brief Managing Equipment and Capacity Upgrades Atlantax Systems and TMI Form Alliance The Legal Line Spot Rates FTC Halts Bogus Prepaid Phone Card Claims Titan Global Re-Appoints Kurt Jensen as Pres/CEO Calling Cards in Brief TX AG Files Suit Against Calling Card Company Startec Moves to PhoenixSoft Cirrus Ringplus.net Offers Free Calls Interchange Fee War Begins edo Interactive Launches Networking Card MasterCard Uses CSC Platform nFinanSe Gets $15 Million Line of Credit Travelex Cash Passport Debuts at US Retail Stores CardEx Offers Cost-Free Gift Cards Payments in Brief Altair and Blueberry Launch a Prepaid Card for Moms FrontStream Acquires Direct Technology Innovations New Etelcharge Version Goes Live Prepaid 101: POSA Retail Focus in Brief NRF Says Retailers Fighting Organized Crime Blackhawk Announces Annual Hawk Awards NRF Says Retail Sales Showed Resiliency in April TravelCenters Adopts Coinstar Pay As You Go Marriott Offers a $25 Visa Gift Card NRF Favors Law Protecting Retailers from Lawsuits Starbucks Card Members Get Free AT&T Wireless Wi-Fi Our Advertisers Classifieds Contact Us

The Prepaid Press - June 15, 2008

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