How Industry Regulators Are Facing Up Against Prepaid Phone Card Fraud

For expatriates, overseas workers and immigrants, prepaid phone cards are the best and easiest connection to homes and villages across continents and oceans. However, these devices, according to some users, don't exactly deliver on what they promise.
According to some, the number of minutes the card tells you that you have, you get half of that, and "It's what everybody thinks." However, not everyone in the prepaid call card industry is smeared with allegations of fraud or misleading consumers, although buyers are still cautioned to be on the lookout for the phony ones.
New Call Card Fraud Allegations Begin To Surface
At present, new revelations, and allegations of fraudulent call card marketing are being heard from an unlikely source, which are some of the largest telecom firms selling the cards. Confirming suspicions long held by users, these card providers are accusing each other in federal court litigation in the state of New Jersey, of methodically shortchanging unwitting clients.
The prepaid call card sector over the years has become a $4 billion industry whose customers are mostly poor immigrants, older people, and other low-income individuals who are unable to afford conventional phone services or lack the documentation needed to sign up with a standard service. A lot of prominent retailers like Wal-Mart Stores and Walgreens sell these prepaid cards under their own brands, however these are generally proven to provide the service they advertise and aren't involved in the current controversy.
Consumer Concerns With Excessive Fess
Some prepaid call card service providers also impose an array of "fees" on card users that sometimes reduce the value of the cards, by cutting 10, 20, or more minutes. Often called connection, service, or maintenance fees, these extra charges are sometimes disclosed in not-too-clear fine print on the back of cards, however at other times is not disclosed at all.
In a 2005 study done by associate professor Julia Marlowe of Housing and Consumer Economics at the University of Georgia, on telecom firm IDT' and its $3 Crazy Crazy Crazy phone card, it was revealed that the call card charges a connection fee at the end of the call for every five minutes of use.
The card levies a 25% service fee, even though it's not clear from the fine print on the card where the 25% fee applies. The card company however says that the fees are fair and vary by destination, and a customer can avoid them by using all of a card's minutes for one conversation, IDT adds.
How Tight Are Regulations On Phone Cards These Days?
As compared to other industries, the regulation of the prepaid phone card market has been relatively light. Only 11 states, including California, Connecticut, Florida, and Illinois, have specific laws on call cards, and other states simply rely on generic consumer protection ordinances and laws, which are rarely applied to these types of devices.
The Federal Communications Commission has the authority but hasn't used it that much, however insider sources from the FCC note that they are starting to tighten their reins on unscrupulous card providers, and will soon be suggesting stiffer enforcement of telecommunications regulations.
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