SAN FRANCISCO, CA: On Oct. 6 the US House of Representatives moved to force companies that sell or distribute prepaid calling cards to describe any fees associated with the cards on packaging and in advertising. The legislation declared that the calling card industry is “plagued by fraudulent and deceptive business practices,” and this new legislation is an attempt to combat that. The bill passed with an overwhelming majority. Since Arab-Americans make up a sizable percentage of international callers, this legislation will have a profound effect on them.
The legislation came after the Federal Trade Commission (FTC) launched an investigation into the industry. The investigation concluded that card companies only deliver an average of 60% of the minutes promised due to charges that are hidden from the consumer. National Consumers League Executive Director Sally Greenberg stated in testimony to the FTC, “(The calling card industry) is a “Wild West” of sellers and merchants who too often prey upon the most vulnerable consumers by promising minutes they don’t deliver and loading up on hidden or undisclosed charges and fees.”
While the new bill requires calling card companies to disclose their rates in fine print to consumers, it doesn’t place any limits on how bad the rates and terms of a deal can be.
It is estimated that fraudulent calling cards may be costing Arab Americans up to $25,000 every day. More often, the Arab-American community is turning to other providers of inexpensive calling services including Rebtel which charges solely on a per minute basis with no other fees or connection charges. “It was precisely because of the rip off schemes we’ve noticed with calling cards that drove us to build a new service that people could trust,” says Rebtel CEO Hjalmar Winbladh.
Greenberg, however, doesn’t believe the bill will go far enough. She said: “While (the bill) requires that the disclosure text on the calling card itself, packaging, or other promotional material (including online) be in the same language used to advertise the card, we would recommend expanding (the bill) to require that prepaid phone card providers provide toll-free customer service lines staffed by customer service representatives able to converse in the languages that the cards are advertised in.”
