FTC: Prepaid Phone Card Marketers Will Pay $2M For Lying To Customers

Photo: Flickr / Keturah Stickann

A crop of prepaid phone card companies has agreed to fork over $2.3 million to settle claims they lied to foreign-born customers about the number of minutes they were purchased, the FTC announced today.There’s no need to spell out how crucial the calling card industry is for immigrants in the U.S., as they rely the cards to keep in touch with friends and families back home. 

But there are often hidden fees associated with calling cards, including dodgy “hang-up” fees and weekly charges. (See which Grandma scams to avoid.)

The suit dates back to 2010, when the FTC filed claims in New Jersey federal court for deceptive advertising practices against Millennium Telecard, Inc.; Millenium Tele Card, LLC; Coleccion Latina, Inc.; Telecard centre USA, Inc.; and their parent company, Fadi Salim.

The defendants allegedly sold cards under the names “Africa Magic,” “Hola Amigo” and “Viva Ecuador” to consumers online. 

But the cards delivered only 45% of the minutes advertised on average and of the 141 cards the FTC tested, only TWO actually provided as many minutes as labelled. 

In all, tens of thousands of customers were affected by the scam, the FTC says.

Now see 9 ways to spot a tax scam >

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.