Ilya Marritz covers business for WNYC.
New Yorkers Bilked By Long Distance Phone Cards: Study
Tuesday, May 08, 2012
New Yorkers who use prepaid calling cards often get fewer minutes on the phone than they expected, according to a new study by Consumer Reports. They can also be hit with unexplained fees.
Researchers purchased 130 cards in seven cities across the state, and found widespread problems. Three-quarters of the cards gave little or no information about rates.
For instance, some cards touted an attractive per-minute rate, but didn't inform the user that the rate only applied for the first phone call. Subsequent calls would be more expensive. Some even charged an unadvertised $1 "hang-up fee."
"Just about every card will say 'Rates and Fees subject to change without notice.' So, it's a lottery, and that's what it comes down to," said Bob Tiernan, the managing editor of Consumer Reports.
In 2010, the office of then-Attorney General Andrew Cuomo reached settlements with three calling card companies over deceptive marketing, primarily targeting Hispanic consumers.
STi Prepaid, Espana Networks, and Dollar Phone Corp. collectively paid $850,000 in penalties to the state. Part of the money was used to fund the Consumer Reports study.
In a statement, the office of New York Attorney General Eric Schneiderman said, “We continue to monitor the prepaid calling card industry.”
Phone cards are regulated partly by the states, and partly by federal agencies including the Federal Trade Commission and the Federal Communications Commission.