FTC Puts 'Deceptive' Prepaid Calling Card Operator on Hold

Pre-paid phone cardsA prepaid calling card company accused by the Federal Trade Commission of deceiving customers has been slapped with a court order preventing its illegal practices while it faces an FTC lawsuit.

Millennium Telecard Inc., the FTC charged, tricked customers -- many of whom are immigrants -- with deceptive advertising, misrepresented the number of available minutes on their cards and failed to disclose hidden fees.

Testing by the FTC found that the average Millennium prepaid calling card delivered less than half the advertised minutes.Prepaid calling cards are a booming industry, and companies like Millennium sell billions of dollars worth of cards annually, especially to recent immigrants who rely on them to stay in touch with friends and family in other countries.

But as Consumer Ally has reported, many of these companies rip customers off with tactics like those Millennium is accused of by the FTC. Since 2007, a task force that includes the FTC and 35 states has cracked down on the industry, prosecuting a number of shady operators and forcing them to refund customers more than $4 million.

The defendants' prepaid calling cards are sold directly to consumers via their website; they're also marketed through newsstands, kiosks, and grocery and convenience stores nationwide. Millennium also sells prepaid calling cards on a retail and wholesale basis in a number of its New Jersey stores.

Millennium markets its calling cards under names such as "Africa Magic," "Hola Amigo" and "Viva Ecuador," and advertises them through point-of-sale posters and on the Internet. These ads, the FTC says, make "bold claims" about the number of minutes calling cards offer to a number of nations, including Argentina, Brazil, the Dominican Republic, Ecuador, El Salvador, Ghana, Mexico, Nigeria, Pakistan, Poland and Vietnam.

But according to the FTC complaint, Millennium's cards don't deliver the number of advertised minutes advertised.

Extensive testing of the defendants' cards by the FTC between August 2010 and March 2011 revealed that the cards delivered an average of only 45% of the advertised minutes. Of the 141 cards tested, 139 of them failed to deliver the number of minutes advertised on point-of-sale posters.

Millennium's cards also carry hidden fees that are poorly disclosed, the FTC charged. These fees include "hang-up fees" and weekly fees that can erase the total value of a card after a single short call. These charges are disclosed in fine print and vague terms the FTC notes "are hard to understand in any language."

The FTC says the defendants violated federal law, and at trial, they'll seek put a permanent stop to their illegal tactics and force them to refund customers or surrender their ill-gotten gains.

At the request of the FTC, a U.S. district court has issued a temporary restraining order against Millennium, halting its deceptive practices, freezing its assets and appointing a receiver to take control of all corporate defendants. The defendants include Millennium Telecard Inc.; Millenium Tele Card LLC; Coleccion Latina Inc.; Telecard Center USA Inc.; and their owner, Fadi Salim.

If you're shopping for a prepaid calling card, make sure to read all the fine print, and if you can't read or make sense of it, look for another one. Searching for complaints about a company on the web is always a good ideas. Finally, check out this FCC fact sheet, Pre-Paid Phone Cards: What Consumers Should Know.
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