FTC: phone card scam leads to $2.3M settlement

WASHINGTON (AP) — The target was immigrants lured by cheap phone-card prices so they could call loved ones back home. But the calling cards delivered far fewer calling minutes than promised, and now their marketers will have to hand over $2.3 million to the federal government.

The Federal Trade Commission announced the settlement Wednesday in what it described as a vast prepaid calling-card scheme that scammed tens of thousands of people nationwide.

The settlement with New Jersey-based Millennium Telecard, Inc., Telecard Center USA, Inc., and several other companies owned by the same man — Fadi Salim — is the biggest settlement of its kind in the prepaid calling-card industry. A call to Salim's attorney was not immediately returned.

Here's how it worked: people bought prepaid cards with names such as "Africa Magic" and "Hola Amigo" for calls to Nigeria, Ghana, Mexico and other international locations. But the cards, the FTC said, often delivered less than half of the minutes promised because of all sorts of hidden fees.

There were fees for simply hanging up the phone. Other fees were applied on the first day, just for using the card, and every seven days afterward.

Before too long, the fees could wipe out the value of the card even with a short call, the agency said.

The cards included disclaimers about the fees, but the commission said the print was so small it was nearly impossible to read.

The FTC did its own testing on the cards and found that they delivered an average of only 45 percent of the advertised minutes. For example, one card that sold for $2 and was marketed as carrying 44 minutes of calling time to a landline in Guatemala only delivered 18 minutes and 27 seconds.

The cards were sold over the Internet as well as at newsstands, grocery and convenience stores and at kiosks nationwide. They carried brand names such as "Absolute," ''Digital," and "Pan Caliente."

Associated Press
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Join the Conversation!

To comment, the following rules must be followed:

  • No Obscenity, Profanity, Vulgarity, Racism or Violent Descriptions
  • No Negative Community Comparisons
  • No Fighting, Name-calling, or Personal Attacks
  • Multiple Accounts are Not Allowed
  • Stay on Story Topic

Comments may be monitored for inappropriate content, but the station is under no legal obligation to do so.
If you believe a comment violates the above rules, please use the Flagging Tool to alert a Moderator.
Flagging does not guarantee removal.

Multiple violations may result in account suspension.
Decisions to suspend or unsuspend accounts are made by Station Moderators.
Links require admin approval before posting.
Questions may be sent to webmaster@wvlt-tv.com. Please provide detailed information.

powered by Disqus

WVLT VOLUNTEER TV

6450 Papermill Drive Knoxville, TN 37919 Phone - (865) 450-8888; Fax - (865) 450-8869
Gray Television, Inc. - Copyright © 2014 WVLT-TV Inc. - Designed by Gray Digital Media - Powered by Clickability 138508544 - local8now.com/a?a=138508544