FTC Says Calling Card Operation Only Delivers Fraction Of Promised Minutes

Back in May, our cohorts at Consumer Reports found that calling cards — especially those aimed at immigrants and intended for making international calls — were often loaded with fees and didn’t always deliver on the minutes they promised. Now, the folks at the Federal Trade Commission have taken action against the operators of one particular calling card that only provided an average of 40% of the promised minutes — and sometimes only a fraction of that.

As part of its investigation into deceptive calling card practices, the FTC purchased and tested 169 different cards from DR Phone, which sells billions of dollars of cards aimed at the international calling market. Not a single one of those cards — with brands like “Beautiful Asia,” “Vietnam Best,” and “Pearls of Africa” — delivered anywhere close to the advertised number of minutes.

On average, users were able to get 40.42% of the advertised minutes from each card. The worst-performing card only delivered less than 1% of the promised minutes.

The cards are advertised with point-of-sale posters that make claims like “Philippines 70 min-per $5″ in large type, along with declarations like “No Fees,” “No Connection Fee,” and “No Maintenance Fee.”

The FTC says that even though there is small print at the bottom of the posters, it only makes vague reference to fees associated with the cards and does not adequately disclose what those fees would be. For example, one poster states, “International calls made to cellular phones and calls via toll free numbers are billed at higher rate,” but without disclosing what that rate might be.

The company has agreed to stop making the allegedly deceptive advertising pending a trial. However, the company’s website is still up and running and apparently selling these same cards. We’ve asked the FTC why the DR Phone website is allowed to continue operating and will update if we receive a response.

Comments

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  1. Coffee says:

    In exchange for admitting no wrongdoing, the company responsible for distributing the cards will be paying the FTC a fine of 1 billion minutes.

    • AstroPig7 says:

      Unfortunately, all of the minutes are for calls to Nigeria and Somalia.

      • Coffee says:

        Don’t hate…that’s worth, like, anywhere between $4,560,000,230 and $173,357,214,647, according to the math geniuses who comment on this site.

    • Difdi says:

      Of which only an average of 400 million minutes will actually be usable.

  2. bhr says:

    I remember back in the days before cell phones my sibs and I got calling cards for summer camp (two of us worked at sleepaways). We discovered quick that the cards were draining quickly because of those connection fees. The first minute of each call cost 5-10x the rest of the call, so something as simple as an answering machine would burn essentially 10 minutes of talk time.

  3. Blueskylaw says:

    I once bought a card from Cumberland Farms to call Europe. What I found out was that most of the fees weren’t even listed on the card, you had to call ahead of time to find them out. My “favorite” fee was that if you talked over 5 minutes there was a charge and if you taked under 5 minutes there was a charge. The minutes listed on the card were impossible to achieve because of the fees, even if you made one long call. I was only able to squeeze out 1 call from that card roughly 15 minutes in length. Though there was still money left on the card, it wasn’t even enough to cover all the fees just to connect the call.

    Bunch of as*hole thieves.

  4. Cat says:

    Word of mouth is the only way to get a good card for international calling.

    • Weekilter says:

      One of the cheap ways to make both domestic and international calling is to use OneSuite with cheap international rates. There is a 50¢ surcharge for making calls from a pay phone though.

  5. TheMansfieldMauler says:

    – with brands like “Beautiful Asia,” “Vietnam Best,” and “Pearls of Africa” —

    You left out the best one: “Cheese Burger Delux”

    P. 4, paragraph 18 of the complaint.

  6. dangermike says:

    good to know. Next time I’m visiting 1996, I’ll be careful in my selection of calling cards. Or wait, Phil Hartman would have still been around at that point, as would his wacky endorsements of 1-800-Collect. Crisis averted.

  7. quail20 says:

    Didn’t calling cards go the way of the land line? I’m confused here.

  8. 808 says:

    These cards do have their place for international travelers. I have a Sprint (?) card that I top off every so often. The per-minute outbound direct-dial-with-PIN rate from certain countries is worth the extra 15 digits or so for calls home from the road. That said, this card is from the ’90s, from Costco, and was much better than other cards, or my not-missed-at-all Sprint cell phone.

  9. Cacao says:

    What most people don’t know is that in some countries, cell phones don’t pay for incoming calls. So when you call one, you pay a much higher per minute rate than say calling a home phone. Sucks.

    Also, Consumerist, I signed in to comment on this post and when I was fully signed in, I was all of a sudden on the sales tax post. WTF?!

  10. I look at both sides of the story says:

    Why don’t people use free Skype-to-Skype instead of paying for calling cards?

    (yes, this is a troll)