International Law

Prepaid Phone Card Fraud

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From the FTC Press Release regarding Prepaid calling card fraud:

The Federal Trade Commission today told the U.S. Senate Committee on Commerce, Science, and Transportation that while the FTC will continue its aggressive law enforcement and consumer education programs in the prepaid calling card arena, pending legislation would benefit consumers by providing "an additional remedy to those already available to the Commission."

FTC Chairman William E. Kovacic told the Committee that the Commission has been bringing law enforcement actions involving deceptively marketed prepaid phone cards since the 1990s.

"This spring, the FTC filed two cases against major distributors of prepaid calling cards."

The FTC alleged that the defendants marketed their cards to recent immigrants, misrepresented the number of calling minutes provided by their cards, and failed to disclose adequately fees and charges associated with their cards.

The testimony notes that the FTC conducted tests on the cards before it filed the suits.

In the first lawsuit, the cards delivered, on average, less than 43 percent of the advertised calling minutes.

In the second suit, the cards delivered, on average, only 50.4 percent of the minutes advertised.

The testimony also notes that the agency works closely with other law enforcement partners on the issue of deceptively marketed prepaid calling cards.

"In the fall of 2007, the FTC established a joint federal-state task force concerning deceptive marketing practices in the prepaid calling card industry.

The task force members include representatives from the offices of more than 35 state attorneys general and other state and local agencies, and the Federal Communications Commission. Working cooperatively allows us to share information and facilitate law enforcement activity in the prepaid calling card area," the testimony states.

Full post as published by Misleading Advertising Law on September 11, 2008 (boomark / email).