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Monday, February 6, 2012

FTC fines calling card companies $2.32 million

Several affiliated calling card companies agreed to pay $2.32 million as part of a settlement of charges brought by the Federal Trade Commission. The regulatory body alleged that the companies engaged in deceptive advertising and marketing practices around calling cards targeted at immigrant communities. The FTC said the companies' prepaid phone cards delivered an average of only 45 percent of calling minutes advertised.

The defendants in the case are Millennium Telecard Inc., Millenium Tele Card LLC, Coleccion Latina Inc., Telecard Center USA Inc., and their principal is Fadi Salim. The phone cards were marketed under the names "Africa Magic," "Hola Amigo," and "Viva Ecuador." According to the FTC, the cards were sold directly to consumers via company websites, newsstands, grocery and convenience stores, and kiosks nationwide. Additionally, the cards were sold by the defendants from their own stores in New Jersey, the FTC said.

According to the May 2011 complaint filed in the U.S. District Court for the District of New Jersey, the FTC said the defendants' advertisements made "bold claims" about the number of minutes the phone cards provided cardholders when they made calls to international locations, including Argentina, Brazil, Dominican Republic, Ecuador, Mexico, Pakistan, Poland, Vietnam, Ghana, Nigeria and El Salvador. But the FTC said consumers didn't receive the number of minutes advertised.

The FTC conducted testing between August 2010 and March 2011 that showed the cards delivered an average of only 45 percent of the advertised minutes. And of the 141 cards tested, 139 failed to deliver the number of minutes advertised on posters in stores, the FTC said.

The FTC also alleged the defendants charged hidden fees, such as "hang-up fees" and weekly fees that could wipe out the value on cards after "even one short call." Furthermore, the fees were disclosed in tiny print and in "vague terms that were hard to understand in any language," according to the FTC.

The Jan. 20, 2012, settlement agreement also bars defendants from misrepresenting the amount of calling time consumers receive on phone cards and requires defendants to "clearly and prominently disclose" fees, as well as monitor the advertising materials displayed by their distributors to ensure the accuracy of phone card minutes delivered. end of article

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