May 20, 2010
The Federal Trade Commission reached its third settlement as part of a recent agency crackdown on fraud in the prepaid calling card industry that has forced companies to pay more than $4 million.
The latest agreement requires New York-based Diamond Phone Card, Inc. and its principals to pay $500,000. It also bars them from misleading consumers about the talk time that their calling cards provide, and requires them to clearly disclose in the same language that they are marketed all fees associated with their cards.
The FTCs July 2009 complaint against Diamond Phone Card like the FTCs complaints against other calling card companies alleged that the company made false claims about the number of calling minutes their cards deliver, and that it failed to properly disclose maintenance and other hidden fees. Some fees were disclosed in nearly illegible print on the bottom of the companys advertisements.
The FTCs testing showed that consumers received only about half the advertised minutes from Diamond prepaid calling cards.Unlike Diamond Phones ads, the FTCs message here is clear, said FTC Chairman Jon Leibowitz. If you deceive consumers about the prepaid calling cards youre selling, we will take you to court and force you to give up the money you made through deceptive sales tactics.
The complaint named the company and its principals, Nasreen Gilani, Samsuddin Panjawani, and Faiez Farishta. The FTC alleged that they marketed calling cards to recent immigrants for calls to a wide range of international locations, including the Dominican Republic, El Salvador, Mexico, India, Pakistan, and Guatemala.
The FTC has established a joint federal-state task force in 2007 to deal with deceptive marketing practices in the prepaid calling card industry. The task force also includes representatives from the Federal Communications Commission and more than 35 states. The settlement has been filed with the U.S. District Court for the Eastern District of New York.
In approving the settlement, Commissioners Edith Ramirez and Julie Brill urged Congress to expand the FTCs authority to take action and seek fines against telecommunications carriers and distributors that engage in unlawful conduct by deceptively marketing prepaid calling cards.
For immigrants from Latin America, Africa, Asia and elsewhere around the world, American military families, and other consumers, prepaid calling cards can serve as a critical lifeline to friends and family, Commissioners Ramirez and Brill said. Noting the widespread deceptive practices in the marketing of these cards, the Commissioners said, "the time has come to give the FTC more powerful tools to tackle fraud in the prepaid calling card industry.
