Attorney General Bill McCollum News Release
June 11, 2008
Contact: Jenn Meale
Phone: (850) 245-0150
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McCollum Announces Prepaid Calling Card Settlements, Industry-Wide Reform

TALLAHASSEE, FL – Attorney General Bill McCollum today announced that his office has reached a resolution with multiple prepaid and long distance phone card companies that will initiate industry-wide reforms for Florida consumers. Companies entering this agreement have agreed to cease all deceptive advertising, provide 100 percent of the minutes advertised, and submit to three years of auditing by the Office of the Attorney General to ensure that they are following the terms of their agreement. The companies will also collectively reimburse the Attorney General’s Office more than $1 million for the cost of its investigation and future enforcement efforts.

“The calling card industry has long been targeting non-English speakers and cheating consumers for whom these cards are often a lifeline to loved ones,” said Attorney General McCollum. “Through today’s settlements, we are instituting industry-wide reforms and we expect accountability from these companies.”

The companies signing agreements with the Attorney General’s Office are IDT America, Inc.; Union Telecom Alliance (UTA); Total Call International, Inc.; Blackstone Calling Card, Inc.; CVT Prepaid Solutions, Inc.; Dollar Phone Enterprise, Inc.; STi Prepaid, LLC; Alternatel, Inc; and Cristel Telecommunications, LLC. The Attorney General specifically praised IDT, an international prepaid calling card provider that approached the Attorney General’s Office with information about the problems in the industry and cooperated fully with the investigation.

The Attorney General’s Economic Crimes Division launched an investigation last July after receiving more than 200 complaints about the industry’s practices. Prior to the investigation, consumers complained that companies within the industry often utilized hidden or inadequately disclosed fees and charges such as “hang-up fees,” periodic maintenance fees and destination surcharges. In some cases, call lengths were rounded up to the nearest three- or four-minute increment, thus making a call just over one minute count as a four-minute charge on the card.

According to a recent study done by The Hispanic Institute, prepaid calling cards that were tested only delivered about 60 percent of the minutes advertised. The advertisements seized by investigators with the Attorney General’s Office also seemed to indicate that the industry’s target market was non-English speaking Floridians, many who were purchasing the cards to contact friends or family members in other countries.

“Companies should never be permitted to prey on their consumers’ essential need to communicate with loved ones,” said Gus West, Executive Director of The Hispanic Institute. “On behalf of The Hispanic Institute and Latino America, we commend Attorney General McCollum for being the national leader in combating calling card fraud.”

Under today’s agreement, businesses wishing to enter or continue to participate in the prepaid calling card market in Florida must compete on quality and service, and not use hidden fees or misleading minute calculations to increase their profits at the consumers’ expense. Disclosures must be printed in any language used in the advertisement. There will be a clear representation of the exact number of minutes available on each card and the cards’ expiration dates, if applicable, will be clearly provided. There will also be no surcharges resembling taxes and calls will only be rounded up to the nearest one-minute increment. All additional limitations or terms of use must be clearly provided.
The Attorney General’s Office will continue to work with these companies in a continuing effort to monitor misleading advertising within the prepaid long distance phone card industry and some investigations are still ongoing. Consumers affected by these or other practices may file a complaint by visiting the Attorney General’s website at http://www.myfloridalegal.com or calling the fraud hotline at 1-866-966-7226. The investigation was greatly assisted by the staff members of the Florida Public Service Commission who helped test numerous prepaid calling cards.

Examples of the problematic advertisements are available online at:

http://myfloridalegal.com/webfiles.nsf/WF/MRAY-7FHGJX/$file/roosterFINAL.pdf

http://myfloridalegal.com/webfiles.nsf/WF/MRAY-7FHGKD/$file/pepperFINAL.pdf

http://myfloridalegal.com/webfiles.nsf/WF/MRAY-7FHGKZ/$file/PCIPilot.pdf