FCC fines calling card companies for deceptive marketing
- 09/01/11 04:48 PM ET
The Federal Communications Commission announced on Thursday $20 million in fines against four prepaid calling card companies for allegedly using deceptive marketing practices.
According to the FCC, STi Telecom, Lyca Tel, Touch-Tel USA and Locus Telecommunications scammed consumers by claiming that they could make hundreds of minutes of calls to foreign countries for only a few dollars. In fact, because of hidden fees and surcharges, consumers could only use a fraction of those minutes, the FCC said.
The FCC fined the companies $5 million each.
In one case the FCC investigated, consumers would have to make a single 13-hour phone call to receive the advertised number of minutes. If the consumers made more than one call, they would receive a smaller fraction of the card value. In another case, a card that promised 1,000 minutes was exhausted after a single 60-minute phone call.
According to investigators, the companies targeted primarily low-income and minority communities.
“Every day, people — many of them from our most vulnerable communities — rely on prepaid calling cards to connect with friends and family around the world," FCC Enforcement Bureau Chief Michele Ellison said. "The orders released today detail the misleading practices — from illegible fine print to impossible-to-calculate fees — that some companies appear to use to sell their cards. We hope that these cases lead all prepaid card providers to reexamine their marketing practices to ensure that they are treating consumers fairly.”
The FCC also released an enforcement advisory on Thursday to raise awareness about deceptive prepaid calling cards.
It is surprising that the FCC does not check on these companies and their product offerings before allowing them to go into business. What happens to the poor people who get defrauded?
The Government claims to be "protecting" the consumer with regulations but fails to do so until after the fraud has been perpetrated. The fines levied on these crooks go into the coffers of the Government, not into the people who have been cheated! BY on 09/02/2011 at 10:40
The Government claims to be "protecting" the consumer with regulations but fails to do so until after the fraud has been perpetrated. The fines levied on these crooks go into the coffers of the Government, not into the people who have been cheated! BY on 09/02/2011 at 10:40
I had few cards over a year old sitting at home and i checked the balance and ll the cards were expired even there was no expiration date on the cards. So, wondering how many people have lost the minutes without even a single use. The issuer company should put the expiration date on card if card suppose to expire and customer should have an option to return the unused cards if they don't need it anymore.
I had few cards over a year old sitting at home and i checked the balance and ll the cards were expired even there was no expiration date on the cards. So, wondering how many people have lost the minutes witout even a single use. The issuer company should put the expiration date on card if card suppose to expire and customer should have an option to return the unused cards if they don't need it anymore.
The Federal Communications Commission announced on Thursday $20 million in fines against four prepaid calling card companies for allegedly using deceptive marketing practices.
ReplyDeleteAccording to the FCC, STi Telecom, Lyca Tel, Touch-Tel USA and Locus Telecommunications scammed consumers by claiming that they could make hundreds of minutes of calls to foreign countries for only a few dollars. In fact, because of hidden fees and surcharges, consumers could only use a fraction of those minutes, the FCC said.
The FCC fined the companies $5 million each.
In one case the FCC investigated, consumers would have to make a single 13-hour phone call to receive the advertised number of minutes. If the consumers made more than one call, they would receive a smaller fraction of the card value. In another case, a card that promised 1,000 minutes was exhausted after a single 60-minute phone call.