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January 9, 2008 > Cheap minutes?

Cheap minutes?

By Dustin Findley

Imagine that you have the chance to buy 10 shirts for $10, but you can only get them by buying a plastic card and calling the phone number on the card. You don't know if the card will work, how good the quality of the shirts will be, or even if you will get all the shirts that are advertised on the card for the price. However, the card says "10 shirts for $10," and other cards say, "10 shirts for $5." Would you buy a shirt card?

Prepaid phone/calling cards are advertised as cheap and convenient ways to make phone calls. They promise to save the purchaser money on phone calls, especially international calls. Buy the card, follow the instructions, and call anyone anywhere; the minutes have already been paid. The idea is simple: phone card companies buy minutes in bulk from telephone companies, then sell the minutes to consumers, though usually not directly. A store selling phone cards usually has no control over the quality of phone service.

The Hispanic Institute in Washington, DC, recently published findings from their own independent study which they claim reveal "rampant" and widespread phone card fraud. Testing a number of prepaid phone cards, it was found that many cards deliver fewer minutes than the amount stated on the card. Paying $5 for 120 minutes of talk time, but receiving 73 minutes is not a good bargain. How would you feel if you paid $5 for 120 shirts, but only got 73 shirts? What if you only got 67.29 shirts? Fraudulent phone card companies can take the minutes you pay for and sell them again. It's harder to tell when you're losing minutes than when you're losing a shirt, or a piece of a shirt, but in both cases you're not getting everything that you pay for.

"[Many phone card companies] knowingly mislead consumers with false advertisements and faulty cards. They also mislead consumers through excessive fine print, confusing terms and conditions, or simple omission of important information about card usage," says the Hispanic Institute.

The Hispanic Institute became involved because phone card fraud "disproportionately harms Hispanics, particularly new arrivals to the United States and those without well-developed English skills." Prepaid phone cards are essentially the cheapest and most convenient way to make phone calls, and stay in touch with friends and family in other countries. Phone card fraud is a huge problem, especially for recent immigrants to America, but phone card consumers don't speak up because phone cards are so cheap that it hardly seems worth the effort. A lot of phone card consumers, especially recent immigrants to America, don't know what to do to rectify phone card fraud, to either stop it or receive compensation.

Undocumented immigrants are not the only ones using phone cards, and are not the only victims. People who use phone cards include students, military personnel, teens, travelers, retirees, small businesses, roommates, tourists, newly nationalized American citizens, the elderly, and those with low incomes.

One reason people do not complain about phone card fraud, or even faulty phone cards is that phone cards are so cheap that even when consumers don't get all of their minutes; it is not a huge loss of money. However, over time it is a huge loss of money for the individual phone card consumer and phone card consumers as a group.

Unfortunately, it is not as simple as a purchase of 10 shirts for $10, or even 50 minutes for $5. Phone cards have a variety of fees. Consumers are advised to carefully read the back of the card. Is it easy to understand or filled with fine print?

The phone card industry is a billion dollar industry. The question is how much of those billions do they legitimately deserve? Laws are designed to protect consumers but some are difficult to enforce. Consumers do not always actively seek enforcement of phone card fraud laws due to the effort required to remedy the situation. It is often difficult to tell if the phone card company or consumers who fail to read the fine print are at fault when the consumers don't get all the minutes they expect. Help is available online for information and resources to combat fraud and faulty cards.

Frequent user of phone cards should try different companies until finding one that delivers satisfactory results. Keeping track of minutes and fees will allow users to assess the true cost of a card.

When consumers suspect a phone card is not delivering what has been promised, there are several possible remedies. Report any discrepancies to the phone card company. Does the phone card have a customer service number you can call? Is it toll free? If that doesn't lead to a satisfactory conclusion, try local and state public service or consumer protection agencies, Better Business Bureau, state attorney general, and finally the Federal Trade Commission.

The Federal Trade Commission (FTC) provides information about the perils of phone cards and what can be done to avoid companies known for fraudulent practices. The FTC says it's important to remember that the store from which you buy your phone card doesn't control the phone card service. Try the cheaper cards first to test the quality or ask other people about their experiences.

Phone cards are affordable and economical ways to keep in touch with people far away from home. For those who decide to use them, a few simple protective measures can help avoid fraud and the loss of "inexpensive" minutes. We all want to get as many shirts as we can...and keep them.


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