With all of the recent uproar from local officials about the deceptive practices in the phone card industry, it looked like the issue was finally going to reach the federal level, with scheduled hearings to be conducted by the Senate Commerce, Science and Transportation Committee on Senator Bill Nelson's (D-FL) proposed bill S. 2998. However, it looks like that hearing has been postponed with no new date given leaving us to wonder if the calling card persecution movement is truly dying down?

It was commonly known that IDT had been the lead lobbyist for reforms in the business, utilizing heavy political contributions and insider CEO Jim Courter's connections to help push these initiatives along. However, with Jim Courter's recently being forced to step down from John McCain's fund raising committee due to the scandal behind a shady IDT and Telco Haiti deal, the movement may have lost it's conductor.

It's my personal opinion that the worst of the witch hunt against the phone card industry for the last few months may be behind us. It will never completely go away, but I think the process has run it's course, with lot's of positive changes in the industry like a higher percentage of cleaner cards, clearer advertising and most of all more legitamate overall business practices.

Following phone cards law suit in Florida, Florida Attorney General Bill McCollum announced that the state has reached a settlement with nine calling-card companies. The companies must cease deceptive advertising practices and provide consumers all the minutes of phone time promised.

McCollum says his office received hundreds of complaints in recent years by consumers, many of them immigrants who used the cards to save on the cost of international calls.

His office will be reimbursed more than $1 million for the cost of its investigation. The companies also will be monitored for the next three years. Residents who use prepaid calling cards can stop worrying about being cheated on their minutes.

Source: http://www.forbes.com/feeds/ap/2008/06/12/ap5111035.html 

Attorney General Bill McCollum reached a settlement with several prepaid and long-distance phone card companies accused of duping customers, including St. Petersburg-based Cristel Telecommunications, LLC.

His office says the settlement will start industrywide reforms for Florida consumers. Companies targeted will stop all deceptive advertising, provide 100 percent of the minutes advertised, and submit to three years of auditing by the Office of the Attorney General to ensure that they are following the terms of their agreement. Theyll also reimburse the state $1-million for investigative costs and future enforcement efforts.

“The calling card industry has long been targeting non-English speakers and cheating consumers for whom these cards are often a lifeline to loved ones,” McCollum said. “Through today’s settlements, we are instituting industrywide reforms, and we expect accountability from these companies.”

The targeted companies include IDT America Inc. Union Telecom Alliance (UTA) Total Call International Inc. Blackstone Calling Card Inc. CVT Prepaid Solutions Inc. Dollar Phone Enterprise Inc. STi Prepaid, LLC Alternatel Inc and Cristel Telecommunications, LLC.

Source: http://blogs.tampabay.com/breakingnews/2008/06/ag-settles-with.html 

A proposal to protect consumers who buy prepaid phone cards from rate hikes that result in unexpected loss of calling minutes is awaiting Maine Gov. John Baldaccis signature.

The state Senate on Thursday gave the bill its final approval, sending it to the governors desk.

The bill requires that customers get all of the minutes they signed up for when they bought their phone cards.

It stems from complaints state officials received after a company raised its rates, causing the company to dock customers chunks of the minutes they had bought. This took a lot of people by surprise and resulted in complaints to the Public Utilities Commission.

Source: http://www.chron.com/disp/story.mpl/ap/fn/5635812.html 

The Federal Trade Commission today asked a U.S. district court judge to halt to the alleged illegal practices of CTA or the Clifton Telecard Alliance, a major distributor of prepaid calling cards in the US.

The FTC charges that CTA misrepresents the number of calling minutes consumers get, fails to disclose that consumers’ cards will be charged whether or not the calls go through, and charges hidden fees. According to the FTC, CTA which is headed by Mustafa Qattous, 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. In the last quarter of 2007 alone, CTA’s revenue from the sale of cards exceeded $28 million, the FTC said. A recent study said the prepaid calling card industry could rake in some $22 billion by 2012.

CTA sells cards in increments of $2 to $20 under various brand names, and has cards for use in calling countries from Albania to Zimbabwe, the FTC said. 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 by them. None of the cards delivered the calling minutes advertised by posters displayed where the cards were purchased.

Indeed the Complaints.com Web site and others have numerous complaints about how the firm has done business, the FTC complaint states.

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 any illgotten gains.

Source: http://www.networkworld.com/community/node/26339 

Government crack downs on the prepaid industry are not isolated to the United States. North of the border, the Government of Canada’s Competition Bureau has started an initiative to ensure accurate disclosure of information from prepaid calling card providers.

“We have been involved in the prepaid telephone card industry for the last couple of years,” Derm Jardine, assistant deputy commissioner of the Competition Bureau, says. “We’ve received somewhere in the vicinity of 500 complaints since 2002.”

The complaints include card companies providing fewer minutes than advertised, charging hidden fees (for example, administration fees) and charging higher perminute rates than advertised. These complaints prompted the Bureau to work with companies to take action.

“We work with the companies on an ongoing basis to deal with marketplace issues, and in this case, the real issue was how to properly advertise the value of these cards for consumers so they weren’t misleading,” Jardine says. “It was through discussions with Gold Line (a Canadianbased prepaid phone car provider) that we came up with the Minimum Standard of Disclosure.”

Businesses must conform to the Minimum Standard of Disclosure, three concrete rules the Bureau adopted to address the problem. The Bureau will monitor prepaid companies in Canada to ensure they disclose more accurate information. The rules are:

• Disclose the effective rateperminute and the number of minutes available on the card.

• Disclose any conditions that might adversely affect the advertised rateperminute and number of minutes near the main body of the representation – this information should not be printed in a small font or appear on a background that obstructs its visibility.

• Discontinue the use of fine print disclaimers that contain information contradicting the main message – the main body of the representation should not be misleading when read alone.

“Companies have a number of different cards that satisfy a number of different niche markets,” Jardine says. “In some cases, there’s no need to provide any further information than the basic rateperminute and the value of the card directly. In other cases, that’s not necessarily so.”

Early returns

In most countries, government agencies that interfere with free markets are seen as negative, especially from the big business point of view. However, if the early responses are any indicator, there are businesses that see governments’ involvement as a positive influence. Although the Canadian initiative is fairly new, the initial response from prepaid companies is positive.

“They’re happy that they have a standard they can use in doing the advertising of their phone cards,” Jardine says. “So, the initial response, which is probably a little too early to know, is fairly positive right now.”

Some friendly advice

With plenty of Canadian prepaid phone card companies scrambling to meet the newly adopted standards of the Competition Bureau, here is Jardine’s advice on how to move forward.

• “The first (piece of advice) is to disclose the effective rateperminute and available minutes on the card. That’s the general impression companies are using to attract customers to their products. So, we’re saying, ‘identify on that ad what is the effective rate—i.e. what are you going to get when you buy that card.”

• “Then, if there are any conditions [on the card] that could adversely affect the advertised rateperminute or the number of minutes, you should make those known very close to the main body of the representation because this is information that a customer would need to know, and it is useful for them in making their decisions.”

• “(Lastly), we discourage the use of fine print disclosure. We have had information news bulletins dating back to 1986 on the use of fine print disclosure. In essence, it says you should not use fine print disclosure that basically nullifies that general impression that you’re giving. In fact, in a lot of these cases, what we’ve seen in the phone card industry with these fine print disclosures, once you take them into account, there is no way anyone can ever figure out what the effective rateperminute is on these calling cards. We have actually challenged the companies to tell us, and they weren’t able to do it when they took into account all the fine print disclosures.”

What to expect in the future

The Bureau has some clear goals in mind for the future of the prepaid industry. Their goals can be boiled down to one word: disclosure. This particular goal of the Bureau does not just apply to prepaid, but to all industries.

“We’re looking for disclosure in general, not just in the prepaid industry,” Jardine says. “This is just one in particular that we’ve now reached an agreement with some of their major players. When the consumer goes out and has a specific need in mind, they should be able to look through the various products – through the advertising – and determine what card will best suit their needs. When they buy that card, (they should) be given the actual product that they paid for.”

For the prepaid industry, not just in Canada but the whole world, it appears governmentimposed regulation – in some way, shape or form – has been adopted or is on its way. The scammers and conartists have officially been put on notice. The companies who have played by the rules the whole time in this freeforall industry are finally getting some long overdue vindication.

For more information, visit: http://www.intelecard.com/
  

When SunRocket VoIP finally notified customers that it would cease operations, it did not become a shock for telecom company watchers, but it was a big storm for their innocent customers. They were told to find another phone company, and in addition to that, they lost their money. Along with the statement, SunRocket made it clear that any of the money prepaid by 1000's of customers for their VoIP Service would not be refunded.

The company did try do something to ease their custindicated that future service is uncertain so customers should immediately find alternative phone service.
They did recommend two alternative providers, Packet8 and Teleblend, who are providing special deals to SunRocket customers. However, neither of them will honor SunRocket VoIP contracts. SunRocket likely has a deal with these companies and will likely receive a commission for customers who open accounts with one of the recommended companies. We have a SunRocket phone and will not switch to one of these companies because we feel we have already given them enough money.

There are plenty of other VoIP service providers not affiliated with SunRocket VoIP that are also offering deals. Two of these are XVoice, which happens to have one of the best international calling plans, and Zingotel. Use coupon code Zingo1007 for Zingotel and get one month of free service and free shipping until the end of July. Avoice charges $22.99 per month for their international plan and Zingotel charges $19.95 per month for unlimited calling in the USA and Canada. Packet8 charges $24.99 per month so both of these other options are cheaper.

In short, word of advice for telecom customers: do expect VoIP providers will run into financial difficulties.

Source: http://phonecard.myblogsite.com/entry14.html#body

By: Christina Salerno of TechNewsWorld.com

Scammers used the Internet relay service as if they were deaf people, then ordered products from businesses using stolen credit cards or tried to arrange financial transactions from individuals. There are no regulations that require a person using the service to prove that he or she has a disability. Also, according to federal regulations, operators are not allowed to interfere with conversations.

Scammers from countries such as Nigeria and the United Kingdom have been using a taxpayer-funded telephone relay service for the deaf to target victims in the United States, current and former employees said.

About 700 people are employed at a call center in Riverbank, Calif., that provides phone translations, called "relay services," for the deaf, hard of hearing and speech-impaired. Users can access the free service using the Internet. The service is funded by a surcharge of about 10 to 15 cents a month on all phone bills and regulated by the Federal Communications Commission .

The new owner of the Riverbank operation, New Jersey-based GoAmerica, found that a number of the center's calls were originating from outside the United States. Because the service is for domestic use only, the company said, it blocked the international calls.

No Fraud, No Job
That triggered a dramatic drop in calls and prompted GoAmerica to announce Monday that it would slash its Riverbank staff.

Several employees said Tuesday that those international calls mostly originated from Nigeria and were being used to defraud small-business owners and individuals.

Scammers used the Internet relay service as if they were deaf people, then ordered products from businesses using stolen credit cards or tried to arrange financial transactions from individuals.

There are no regulations that require a person using the service to prove that he or she has a disability. Also, according to federal regulations, operators are not allowed to interfere with conversations.

"We all just kind of feel we weren't working for Verizon (NYSE: VZ)  or Stellar Nordia (GoAmerica's subcontractor), we were working for Nigeria fraud. Now that all those calls are blocked, we're getting real calls, which is good, but now we've lost our jobs," said an employee who has worked at the center for a year, but declined to give his name.

During an average day, he took about 80 or 90 calls. Only three or four of those calls were from legitimately deaf or hard-of-hearing people, he said, with the rest fraudulent or obscene calls.

'Instant' Decline in Calls
GoAmerica blocked the international calls Thursday, and there was an "instant" difference, he said. Most employees were sent home because there weren't enough calls, and layoffs  were announced Monday.

GoAmerica hasn't released a figure for the number of people who will be laid off. However, employees said they were told in meetings that only 150 operators out of 700 will remain on the job. The cuts will be based on seniority, and workers are being offered severance packages with six weeks of pay, employees said.

GoAmerica spokesman Thomas Rozycki said the company blocked all international calls, not just those originating from Nigeria or any other country.

"The nature (of the calls) is unimportant. ... The service is supposed to service domestic traffic," he said. "It is incumbent on the operator to make sure the right network was going on."

The company will keep all California-based relay calls in Riverbank, he said. In response to claims that the company will outsource all Internet-based relay calls to centers in the Philippines and Canada, Rozycki said: "There may be some percentage over time that move, but we have not made formal decisions."

Calls Were a Problem
Employees said the fraudulent calls had been a problem at the Riverbank center, and other relay call centers throughout the nation, for several years since the Internet-based relay service was introduced as a communication tool for the deaf.

Turlock resident Tyler Stevens worked at the Riverbank center from 2002 to 2004, when it was owned by MCI but operated by subcontractor GC Services. MCI had its staff take over in 2003. GoAmerica bought the division from Verizon last month.

"The more I think about it, the more I realize how convoluted the whole thing was," said Stevens, 24, a student at Modesto Junior College. "Not only was this supplemented by the government, but people's credit was getting ruined. The deaf community was getting shortchanged because their operators were doing these calls."

Scammers used the service to hide their accents or locations by using a relay operator, he said, and to fool unsuspecting business owners who thought they were dealing with a deaf person.

Several Web sites and forum boards are dedicated to the problem, and include stories of scammers using Internet relay services to order everything from gold chains and tobacco rolling papers to laptops and puppies. One Web site asks people to lobby the FCC so that only deaf people with an access code can use relay sites.

Forced to Participate
Stevens said operators weren't allowed to disconnect from the calls or interfere in conversations because of FCC guidelines. He said he was fired in 2004 after he decided to hang up on fraudulent calls.

Officials from the FCC did not return calls Tuesday seeking comment.

MCI merged with Verizon in 2005. Verizon spokesman Peter Lucht said Tuesday that the Riverbank center was "appropriately staffed and operated" while Verizon owned it. "GoAmerica owns the business, and it is up to GoAmerica to operate it as it feels best," Lucht said.

Good News, Bad News
Barbara Dowler has worked at the Riverbank call center for two years and said she is most concerned about finding a new job. Working as an operator paid a starting wage of US$10 an hour and included two weeks' paid vacation, sick time, health insurance and other benefits.

About half of the people working at the center are college students or other young people who took advantage of the flexible schedule allowed in a 24-hour call center, she said. The remainder largely are people who used the job to support their families, including Dowler, whose children were on her health insurance policy.

"At first, they said 'Good news, we got rid of fraud!'" Dowler said. But then GoAmerica notified employees a few days later that layoffs were imminent, which she said was a "horrible thing to go through."

"I'll probably be laid off, so I'm already looking for a new job," Dowler said.

Source: http://www.technewsworld.com/story/61713.html 

New Jersey now joins Florida and New York state in the battle against the corrupt practices of the calling card industry. Senate President Richard Cody introduced Bill S2887 that would require all minutes for any phone card be available to the customer with no limitation other than deductions for allowed fees and taxes and no expiration unless clearly disclosed on the card or packaging, and advertising. Strict guidelines would have to be followed by the calling card companies in order to remain in compliance.

This bill also goes further than just targeting the phone card providers, it also targets retailers, who could be fined for knowingly selling phone cards that do not deliver "true" minutes.

The bill still requires the Governors signature and if signed by him, would take another 7 months until it takes effect.

Full Release:

CODEY APPLAUDS SENATE FOR CRACKING DOWN ON UNSCRUPULOUS CALLING CARD PRACTICES
By sciortino - January 7, 2008 - 6:19pm
Release Date: January 7, 2008
Codey to calling card companies: Expose Your Fees and Stop Milking Consumers

Senate President Applauds Assembly for Cracking Down on Unscrupulous Calling Card Practices

TRENTON – The General Assembly today approved a bill sponsored by Senate President Richard J. Codey (D-Essex) to crack down on calling card companies that cheat consumers out of the advertised minutes by imposing hidden fees and restrictions.  Bill S2887 would prohibit certain types of charges and fees and require that all charges and restrictions be clearly disclosed on the cards or packaging and advertising.

 “There are a lot of smaller phone card companies out there that try to stay competitive by advertising what appears to be a great deal,” said Sen. Codey. “Then the consumer gets hit with all these hidden fees and they only end up getting 50 or 60 minutes when they thought they were purchasing 100.  This has to stop.  If I went to a gas station and said fill it up, I wouldn’t expect to drive away with half a tank of gas.”

The bill would require that all minutes promoted or advertised for any prepaid card be available to the customer with no limitation other than deductions for allowed fees and taxes and no expiration unless clearly disclosed on the card or packaging, and advertising.  The bill would also prohibit charging for busy signals or unanswered calls and would strictly limit the charges that can be applied to the card to governmental taxes and payphone surcharges.

Sen. Codey noted that part of the problem is lack of accountability on the part of some of these companies and the subsequent frustration that it causes consumers. Therefore, the bill would also require that all prepaid calling service providers and prepaid calling card distributors disclose a number of different details on the cards or packaging and in any advertising, including:  the name of the company;  the provider’s 24-hour customer service telephone number;  the amount and frequency of any permitted fee that may be applied to the use of the card for calls originating in the United States; notice that additional or different per minute rates, charges or fees may apply to use of the card for international calls;  notice that per minute rates may be higher for calls made via toll-free numbers;  and any applicable policies relating to refund, recharge, decrease in minutes and expiration.

Sen. Codey noted that there is concern that many phone card providers advertise their services to consumers for a specific price and then cheat consumers by not providing such service. For instance, providers will advertise that the phone card provides 100 minutes of telephone time for a fixed price of 2 cents a minute.  The providers, however, will deduct from the card hidden fees such as “connection fees”, “disconnection fees”, “operation fees”, “cellular phone fees”, and other charges.  As a result, the consumer will not receive the 100 minutes that he or she expected, but instead will receive 40% to 60% of that. 

In order to enforce these provisions, retailers would be prohibited from knowingly selling prepaid calling cards that provide fewer minutes than the number of minutes advertised or promoted.  Violations of the Act would be treated as violations of the Consumer Fraud Act.

The bill would take effect 7 months after enactment, but would not apply to cards printed prior to the effective date.  The Senate unanimously approved the bill in December and it now heads to the Governor for his signature.

Source: http://www.politickernj.com/codey-applauds-senate-cracking-down-unscrupulous-calling-card-practices-15152