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New Jersey Calls 'Time Out' On Prepaid Calling Cards

Seven companies told that every second counts

March 17, 2009

Prepaid Calling Cards • D.C. Sues AT&T for Unused Calling Card Balances • California Gets Judgment Against Calling Card Company • New Jersey Calls 'Time Out' On Prepaid Calling Cards • FTC Backs Crackdown on Pre-Paid Phone Card Abuses • Texas Sues Prepaid Calling Card Company • Illinois Targets Pre-Paid Calling Cards • IDT Calling Card Charges Probed • AT&T Faces $500 Million Phone Card Payment

New Jersey has entered into settlement agreements with seven telecommunications companies regarding their advertising and sale of pre-paid calling cards and concerns whether consumers were receiving the full amount of time for which they paid.

“Getting less than what you paid for is illegal and these settlements ensure that the terms governing the use of calling cards are clearly and plainly disclosed to consumers,” Attorney General Anne Milgram said. “We’ve told the industry that ‘every second counts’ and these companies will account for every second on these cards.”

The settlement terms mirror requirements contained in a new state law governing pre-paid calling cards that took effect last year.

“These settlements, and the state law governing calling cards provide New Jersey consumers with protection against the deceptive sales practices which have plagued this industry for too long” said David Szuchman, Consumer Affairs Director. “We’ve changed the business practices of this industry and the millions of consumers who buy calling cards each year will benefit.”

The seven companies are:

• CVT Prepaid Solutions, Inc., 40 Cuttermill Road, Suite 500, Great Neck, New York 11201
• Dollar Phone Enterprises, Inc., 232 Broadway, Brooklyn, New York 11211
• Epana Networks, Inc., 1250 Broadway, 30th Floor, New York, New York 10001
• IDT Corp., 520 Broad Street, Newark, New Jersey 07102
• Locus Telecommunications, Inc., 111 Sylvan Avenue, Englewood Cliffs, New Jersey 07632
• STi PhoneCard, Inc., 30-50 Whitehouse Expressway, 4th Floor, Flushing, New York 11354
• Total Call International, Inc., 707 Wilshire Boulevard, 12th Floor, Los Angeles, CA 90017

The settlements conclude investigations into each company’s business practices related to pre-paid calling cards. Each company has paid $5,000 to reimburse the Division’s costs. Other than CVT (which is no longer selling pre-paid calling calls), each company will pay $5,000 per year for the next three years to offset the cost of the Division’s continued monitoring for compliance.

As part of the settlements, each company also agreed to the following business practices:

• Comply with the Consumer Fraud Act and regulations, as well as any other state and/or federal laws, rules and regulations which are applicable to all future sales and marketing of pre-paid calling cards by or on behalf of the company;

• Ensure that all minutes or rates, or both, advertised on any pre-paid calling card, any point of sale material relating to that card or otherwise relating to any pre-paid calling service, shall be available to the consumer and there shall be no limitations on the period of time for which the advertised minutes, or rates, or both, will be available to the consumer unless those limitations are clearly and conspicuously disclosed in the same location on the card, advertising or point of sale material where the minutes or rates, or both are advertised;

• Ensure that all service minutes promoted, advertised or disclosed on any voice prompts provided at the time the consumer places a call with company’s pre-paid calling cards shall be immediately available to the consumer on that call. The consumer shall not be charged for any busy signal or unanswered call;

• Not charge, apply or deduct from a pre-paid calling card’s balance any fees, taxes, surcharges or other amounts for use of the card except: (1) the rate per minute for the particular destination called; (2) any permitted fees; and (3) any rate per minute, fee or charge for use of the card, or permitted for calls to or from international telephone numbers, international cellular and international wireless telephone numbers;

• Clearly and conspicuously disclose all permitted fees, as well as any other fees and surcharges, on its pre-paid calling cards and/or packaging materials and on its advertisements;

• Clearly and conspicuously disclose the company’s policy of rounding off time for billing purposes on its pre-paid calling cards and packaging materials;

• Make available to consumers a toll-free customer service telephone number to address any post-order inquiries concerning all pre-paid calling cards, and clearly and conspicuously disclose to consumers the telephone number in all materials accompanying the pre-paid calling cards;

• Within thirty (30) days of settlement, make available through the toll-free customer service telephone number all information concerning any charges and deductions and its and its policy of rounding off time for billing purposes; and

• For a three-year period, maintain and preserve, and make available to the Division upon its request, specified documents and records.

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