May 12, 2013 in Business

BBB Tip of the Week: Prepaid phone cards

 

The Federal Trade Commission investigated the prepaid phone cards of the company DR Phone Communications for more than 12 months and found the cards averaged only 40 percent of the minutes advertised.

Under a settlement with the FTC, DR Phone Communications and its distributors are prohibited from making deceptive claims or advertisements about its prepaid phone cards, the minutes on its card and the per-minute rates. The company must pull all deceptive materials used in the marketing and sales of its prepaid phone cards.

In addition, they must clearly and prominently disclose all fees and when they apply and when the calling card expires.

This settlement highlights a general principle of the Federal Trade Commission Act: that advertising must be truthful and non-deceptive and is deceptive if it contains a statement that is likely to mislead consumers acting reasonably.

In the case of DR Phone Communications’ prepaid calling cards, the misleading marketing materials about super-low per-minute calling rates were not clearly explained or qualified by the confusing or nonexistent fine print.

Before purchasing a prepaid phone card, the BBB encourages consumers to carefully read the marketing materials, such as posters or web pages, including the fine print, and to consider the following:

• Are there fees that lower the card’s value, such as “hang up” or “maintenance” fees or “pay phone surcharges”?

• Are the minutes only good for a single call? Do multiple calls drastically reduce the minutes? Is there a higher rate (less minutes) if you use the “toll free access” number rather than the “local access” number?

• Can you use the minutes to call a cell phone?

• Are the rates higher for an international call?

• Is a toll-free customer service number provided?

If your prepaid phone card doesn’t work as advertised, you can contact the FTC at (877) 382-4657 or online at ftc.gov/complaint and the Federal Communications Commission at (888) 225-5322 or online at esupport.fcc.gov/complinats.htm.

Erin T. Dodge, BBB Editor

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