This is a shame. I hope the card companies are held accountable.

Thank you FTC for investigating this crime.
I'd like to see some harsh jail terms for this kind of crap.

Too bad they're doing this years after prepaid phone cards were big. I remember buying a 1000 minute card that docked me about 45 minutes for a three-minute conversation, within the US. But everyone's got cell phones now and I can't remember the last time I've seen a pay phone.

I've never actually used one before.....I never really saw the point.

@darkryd:
Are you kidding? This is America where big corporations are never held accountable for their actions (re: $700 billion bailout).

If they do not get the minutes they are supposed to, is this really the cheapest way for these people to make international calls ?

Have they ever heard of Skype ? Vonage ?

I'm sure at least 75% of the people that use prepaid cards have an X Box 360 or PS3. If they can afford those extras, perhaps they should look at investing in a personal computer with broadband service so they do not get ripped off on international calls.

As far as I am concerned, if you get burned once by a prepaid card, why would you try again ? It's like touching the stove after someone tells you it's hot ! You might touch it once, but you don't keep putting your finger back on it to get burned again and again !

I am almost forgot the super deluxe cable package most of the pre-paid card users probably have as well !

@Gokuhouse:

I think they're typically used by lower income families that don't have cell phones/long distance calling or people who need to call out of the country. My boyfriend's cousin had to use them when he (briefly) lived in the US because it was the only way he could call his family in Venezuela.

As far as the article goes, that really is a pretty sleazy practice. It's pretty much another case of a business taking advantage of people that they know won't, or don't have the means to, retaliate.

How can a consumer verify the minutes on a card?

Is the only way to actually time the minutes of calls, so you don't know if you've been scammed till the card is used up?

And even if you buy with a credit card, how can you document the shortage to win a chargeback?

I've been trying to drill this into my roommate's head. She keeps a few phone cards for "emergencies", regardless of how much of a rip off they are. She just got a prepaid cell phone, so maybe she'll stop using those blasted cards now.

I've also never used one before, but I sincerely hope the FTC nails the bastards to a wall.

@310Drew:

I think you need some fact checking before you start spouting nonsense.

What evidence do you have to support this claim?

@Gokuhouse: I know a lot of immigrants use them to call back home.

@SkokieGuy: Timing the phone call? I had to buy one to use for a semi-emergency a few years ago... I was stuck in an airport, my flight had been canceled, and if they were going to re-route me, I wouldn't be getting home until 1-2am. I was coming home from DC, where I had broken my cell phone... my usual way of contacting everyone.

I bought a 30 minute card, managed to get a 5 minute conversation in with my boyfriend before the card cut me off.

I dropped long distance on my home phone and have been using pre-paid long-distance cards from Sams Clubs for years. Just program the numbers in to your phone's speed dial for convenience. At 2 or 3 cents a minute, I save quite a lot considering how few LD calls I need to make each month. I keep records of these calls for billing purposes and the minutes have been accurate. I wouldn't trust a generic card from a convenience store, though.

@tmed: "I'm sure at least 75% of the people that use prepaid cards have an X Box 360 or PS3."

Really? Ok, please cite sources for your numbers!

I am from a small town. Pre-paid phone cards are common. Most people there don't have cell phones. My mom and sister still have dial-up. Most of her friends don't even have a computer. Some people use pre-paid cards because they don't have any other options.

i hear a lot about people who have been deployed overseas using phone cards. such a shame if they are only getting half the time they, or someone else, paid for to talk to their families.

Some cards are legit. You just have to get legit cards. Like cmdrass above, who uses Sam's Club cards.

I have seen that on the back of the cards. As "Gokuhouse" pointed out. I do not see the point. Yes i have a home phone and yes I have a cell phone with no LD charges on them. So a calling card does not work for me. I know people that have used them.

I don't see why this is such a big deal... if you don't agree to the terms, don't use the card. I use a card that costs a bit more per minute, but has no fees and is rounded to the nearest minute. If you're expecting to make a small number of long calls, another card might be better for you. I call user error.

@cmdrsass: I agree. If you don't make many long distance calls per month, this is a much cheaper way to go than paying for a long distance plan with a monthly minimum charge or a high per minute rate thorough a long distance carrier.

What's really sad is that for deployed military people, this is one of the only ways to call home.

@Gokuhouse: Maybe if your traveling and you can't use your cell phone in the place you are going, and if your traveling its probably a good idea to get one for emergencies just in case something happens at least you could run to a payphone and make a call without having to worry about having cash on you or finding change to dump into the payphone. Thats pretty much the point I see with using pre-paid cards.

@ryatziv: Oh, come on. "A 360-minute card to Panama gave only 23 minutes of calling time." That's ridiculous and unreasonable. They are doing this because they are getting away with it. They should no longer be able to get away with FALSE ADVERTISING which is, as you know, illegal. I love how people like to throw around "user error" to make themselves feel superior.

Some cards obfuscate their rate by boldly advertising the number of "UNITS" on a card. The card packaging doesn't even list how many minutes this will translate into when used on a non-pay phone. The hidden fees are X units per call - even if no connection is made, as well as calls using a minimum of X units even if only 1 minute long.

Costco also offers calling cards with great rates.

@little stripes: We're not given the specifics of how exactly these numberes were reached, but if the card says "25 cents surcharge for payphones, 50 cent connection fee, $1/month upkeep fee", and you're buying it to use for something other than a single call originating from a landline, that's dumb.

@310Drew: You know what happens when you assume...

Many international cards work like this: they give you X minutes, and for countries that would normally be cheap to call (e.g. Mexico, Canada, UK) you get X minutes of talk time, that is the advertised time. For other countries that are more expensive to call there an "exchange rate" where it's something like 3 card minutes equals 1 minute of talk time. The conversion rates are usually listed on the packaging. The so-called hidden fees are also almost always disclosed on the packaging as well.

While it's not an ideal system it lets them sell one international card that works for all countries instead of having to make tons of different cards for all the different rates. I've also seen plenty of cards that just say they are $10 cards and list how much per minute to each country they are, which is probably what they should all be.

I must be lucky. I used Red Texas to talk to a Canadian friend while I was in (guess where!) Texas, and I often got WAY over the 100 minutes they sold me. And it had a nice little voice at the beginning of every call telling you how many minutes you had.

The one time I actually wore one all the way out, an operator interrupted the call to let me know, and gave me an extra 5 minutes! :3

If you do make a decent number of international calls each month, it might be worth it to just get the $5 "AT&T Worldwide Value Calling" plan from AT&T (assuming you're in ATT territory--i don't know what similar thing VZ may offer).

My company added that feature on and now our calls to France, for example, are 9¢/min vs the $5.00 or more per minute it used to be.

Even better, they backdated it a month when I added it, saving us over $800 from calls we'd already made, without me even asking them to.

You can look up the rate for your favorite country here:
--> [www.shop.att.com]

@310Drew: So because of a hypothetical 75% ownership of a video game console, it's these people's fault they're being ripped off by unaccountable companies operating illegally or unethically?

Back in 2004 (before I had a cell phone) I drove cross-country with my grandparents from Portland; somewhere in Nebraska I decided to get a phone card for $20. I think it had maybe 250 or 300 minutes. Anyway, I used it a lot during my three week trip, and it didn't run out, and I ended up using it again much later that year for some international calls. Even with those I remember getting what seemed like more than what the card said as far as minutes, but certainly not less. And I even bought it at a Walmart too! (There weren't any other stores nearby, fwiw)

So, I guess my only experience with a calling card has been good, but I can certainly imagine in more recent years the terms changing or them trying to save by cheating customers.

@Gokuhouse: I remember how useful they were about ten years ago when cell phones were still a luxury item. Made traveling so much easier.

Now the only people I know who use them are soldiers recovering at Walter Reed. Every year the charities ask for donations of phone cards because apparently soldiers don't get free phone calls home. (Or much of anything else, really.)

Back when I used to make lots of international calls I used to buy these all the time. If you found the right card for the country you were calling and the type of phone you were using, you could get very good deals, much better than the international calling plans offered by the telephone companies.

I used to buy them at a store that carried at least two dozen different brands of cards and the people at the store had made a chart that showed the best deals for specific countries and telephone conditions. The best deals totally depended on the country you were calling and the type of phone you were using. I mostly bought the "Lucky Seven" brand phone cards - they were a great deal for a while but I never would have touched them without that store's handy dandy chart.

@Outrun1986: True, especially if you're somewhere where the payphones don't take coins.

@310Drew: "I'm sure at least 75% of the people that use prepaid cards have an X Box 360 or PS3. If they can afford those extras, perhaps they should look at investing in a personal computer with broadband service so they do not get ripped off on international calls."

Ah what? Outside of your circle of friends and coworkers, how many people do you know that know what skype is, and have microphones on their computers? Also, the rates that these phone cards advertise (which may very well be false) still ends up generally being less than the rates that Vonage charges for international calls (8-12 cents for Panama).

Now on to the Xbox360 example. 10.5 million Xboxes, and 5 million PS3s as of July 1, 2008 in the U.S. So by your estimate there are no more than 20 million people who use phone cards in the U.S., spending $200 each on phone cards? At that rate an unlimited plan with the phone company would probably be cheaper.

@ryatziv: My younger sister has been screwed by these cards before. They make it VERY, VERY, VERY difficult to find out the "terms" -- in fact, these terms were nowhere on the card. I'm pretty sure you had to call to get these "terms."

THEY ARE SCREWING THE CUSTOMERS. I love this "oh whatever, their fault!" mentality. Please. They shouldn't be getting away with this. Some people HAVE to use pre-paid phone cards, and it's not right that these companies get away with this. It's unethical. And likely illegal.

@ryatziv:
Remember many of the cards require a 10x magnifying glass to read the terms. Also english is not the first language for many of the users. So legalize makes it harder to understand the terms.

I have been using calling cards for over 10 years now, without any real big problems. I have always bought my cards from Callingcards.com and not from stores. I have found that reputation in this industry is everything, and they have been around awhile, and they only sell good cards. This helps me figure out which cards are bad and not. I only buy from them.

@SkokieGuy: one would think that you could just log the times like some people log miles on their car.

We use one to call to the UK to his family. Never had an issue getting the full number of minutes paid for and always (when needed) good customer service.

[www.nobelcom.com]

@JoseRZ: I agree with the magnifying glass comment... so if you are unable to read the terms, don't use the card *shrug*
English is my second language.

@Veeber: HUGE assumption. My parents do not own an Xbox or PS3. My uncle and aunt don't either. In fact, neither do I. I use skype with my parents but my uncle and aunt don't have it so phone cards it is.

and the advertised rates are often cheaper than skype so my mother uses a phone card to call sometimes too.

Talk about ass..uming

@310Drew: Hmmm, So all these people that need to make a phone call when they are not at home should just plug in their Xbox that they have carried around???

Dude...
FAIL!

@GrandizerGo: I know, right? I was like ... lol.

Do what I did, drop phone cards, switch to VoIP "calling cards". You call a number, get a dial-tone, dial where you want to. If you want incoming, go to their website (via cell phone or web browser), initial a call back, get a dial tone.

Lots of voip companies do this... future nine, callwithus, inphonex, etc etc.

@ryatziv: What of people who don't have any or many other options? Why is it okay for them to be taken advantage of them? I swear, the ignorance, arrogance, and privilege has been RIPE in consumerist lately.

@little stripes: Welcome to America, one of the world's foremost capitalistic societies. Isn't it great? If you don't like to read the fine print, this probably isn't the place for you.

my wife uses these a lot to call home (she is Filipino) and they never deliver the promised minutes (usually they disconnect so often or just don't connect in the first place you spend half the card amount on redialing over and over, no to mention the minimum charge per call)

Unfortunately most of these 'call internationally for one low monthly fee' VoIP plans only includes canada, mexico and a few europien countries, not the phllipines, UAE or anywhere else we actually have to call so the cards (and the problems that come with them) are still cheeper.