NY1 For You: FTC Issues Warning About Prepaid Phone Cards
One local consumer group is sending out a warning about prepaid phone cards. NY1’s Susan Jhun filed the following NY1 For You report.
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They're convenient when they work, but according to the Federal Trade Commission, too often pre-paid calling cards do not work the way they're suppose to.
“In the cases that we've brought frequently, the cards delivered less than half of the minutes they promised,” said Len Gordon, regional director of the Federal Trade Commission.
The FTC has recovered $4 million in lawsuits against several phone card distributors, the latest against Diamond Phone Card.
“Against Diamond we recovered half a million dollars and the problems here were the same with most of the companies in this industry that we've sued,” Gordon said. “Consumers were not getting the minutes promised and that's due to fees and surcharges that consumers were not told about, were not told about adequately at the time they purchased these cards.”
Lawyers for Diamond Phone Card released the following statement in response:
"The FTC and the Law Office of Eric Schneider engaged in negotiations regarding Diamond Phone Card. We believe that the settlement brings a resolution favorable to both sides."
To avoid pre-paid phone cards with hidden fees or ones that simply don't work, Gordon recommends you do some research.
“If the fees aren't disclosed properly on the posters or the card that can be a warning sign,” said Gordon. “A great way to check if the card you're buying is a good one is to ask the store owner. Will you guys stand behind this if it doesn't deliver the minutes promised? If they say no, that's a big red flag that either you don't want to buy that card or you don't want to buy a card from that vendor.”
Also check for expiration dates and inspect the card before you buy it to make sure the PIN hasn't been scratched off, which probably means it's a used card. For more information and tips you can log onto the FTC's website at ftc.gov.
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