Immigrants Are Sitting Ducks: Prepaid International Calling-Card Scam

Have you ever used a prepaid international calling card?  If so, you’ve likely been ripped off.

Immigrants and travelers most often use such cards to call family and friends back in their home country.  Such cards seem to be an easy and low-cost method to make international calls.  All a caller does is dial a “local access number” then plug in the destination number, thus allegedly turning a long distance call into a lower-cost local call.

The New York State Attorney General Eric Schneiderman estimates “the phone card industry has mushroomed to a $4 billion industry with an estimated 500 million cards sold last year alone.”  

Consumers Report found that “prepaid phone cards are prevalent in immigrant communities, particularly among Hispanics.”  It notes, the calls are “less expensive than those made from a standard landline phone.” Sadly, it warned, “our shoppers found that about three-quarters of the phone cards they bought didn't disclose calling rates.  And, given the multitude of murky fees and surcharges imposed by many of the cards, being an informed buyer is nearly impossible.”

Dozens of companies are in the prepaid international calling-card business, including AmanTel, AT&T, CallingCard Plus, Dezco, Dollar Phone, Dynasky Sino, IDT, Noble.com, PT1, STI, SMT and ZapTel.  And all-too-many offer hidden fee scams.  

In 2015, the Federal Communications Commission (FCC) reported, “ads from certain prepaid card providers claim that buyers can make hundreds or thousands of minutes of calls to certain advertised destinations for just a few dollars.”  It then warned, “In reality, a consumer using these particular cards could make calls for only a fraction of those minutes due to multiple hidden fees and surcharges.” 

The NY AG warns that among the leading “hidden fees and surcharged” foisted on callers are the following:

• Connection fees - many cards charge at least 50¢ for connection and in some cases even more each time you make a call.
• Pay phone surcharges -- many cards charge an additional fee of at least 50¢ per call for each call made from a pay phone.
• International surcharges -- many cards charge an additional fee of up to $3.00 for each international call.
• Taxes -- many cards levy an additional surcharge of up to 25% per call for "taxes."
• "Maintenance fees" -- some cards charge a weekly "maintenance fee" after the card is first used; if you use the card only occasionally, this fee can add up.
• Roundings -- most cards round up a call to the next minute; some cards use 6 minute rounding that means a 1-minute call will be charged as a 6 minute call.

The Federal Trade Commission (FTC) identifies still other scams: 

• “Post-Call,” “Disconnect” or “Hang-Up” fees -- charges deducted each time you hang up the phone after using the card.
• “Pay phone surcharges” -- charges deducted if you use the card at a pay phone.

It found that calling card companies also rip-off customers through bad connections, access numbers that are almost always busy, and personal identification numbers (PINs) that don’t work.  It warns, “As a result, the cards don’t deliver the call time they advertise.  And because you’ve paid in advance, you may be out of pocket – and out of luck – if you discover a problem.”

Callers would never know that they’ll likely get ripped off by reading a company’s website or even comparing pricing.  A recent study by QuickCall, “International Calling Card Rip-Off,” estimates that “up to 78% of advertised value is not delivered.”  (QuickCall is a prepaid calling service that doesn’t use a card.)

The study examines five calling-card companies – DollarPhone, Dezco, IDT, SMT and STI -- in terms of fees for a 10-minute call to Ghana.  The ostensible per-minute call vary, ranging from IDT’s 28.6¢ for IDT to DollarPhone’s 42¢; Dezco at 39¢, SMT at 31¢ and STI at 43¢.  

However, the calling-card scam gets going when moving from the advertised or ostensible fee to the actual charges for a 10-min call to Ghana, for example.  QuickCall found that with the additional of associated fees, the cost of a call jumped noticeably:

• IDT -- $2.8610-min rate, plus administrative fee on the card; 
• SMT -- $3.19 10-min. rate plus $0.39 per call completion fee;
• Dezco -- $3.92 10-min rate plus $0.99 call completion fee;
• STI -- $4.3810-min rate plus $1.49 connection fee;
• DollarPhone -- $8.19 10-min rate plus $1.49 completion fee and $0.25 min service fee.

On its website, DollarPhone states its mission as: “to Deliver an Unparalleled Distributor and Customer Experience.”  And adds, “On the consumer side, we make sure that our consumers stay well connected to their friends and family abroad by providing them with innovative and top level prepaid solutions that meet their wants and needs.”  It then claims, “No Added Fees: No additional taxes or monthly 'maintenance' fees to pay.”

But, as QuickCall found, a careful analysis of a 10-min call to Ghana reveals that the $8.19 charge broke-down as follows:

• $4.20 for call portion;
• $2.50 additional $.25/per minute service fee;
• $1.49 completion fee and charged when caller hangs up.

The QuickCall study is not an isolated insight into how the call-card scam works.

ZapTel, a calling card “store,” offers 15 cards, ranging from AT&T to 

Africa Best, Au Pair’s Choice, International Student’s Choice and to ZapTel Call The World.  The cards offer calls to Ghana at per-minute fees ranging from 15¢/landline or 16¢/mobile from Phone Bank to 70¢/landline or 90¢/mobile from AT&T.  

However, two-thirds of the cards have a warning notice, “Additional Fees Apply.”  Among the major additional fees identified are:

• Surcharges per call – charges vary and range from 15%; 10% -- $1.00 connect fee on each call, 69 cent connect fee if domestic call; 10% + variable $0 to $1.00 connect fee based on calling destination.
• Service fees – vary by card, including: $0.79 every 5 days; begins midnight after first completed call; $0.59 every 2 weeks starting after first use; $0.59 charged once after first use and once per month thereafter.
• Payphone surcharges – vary, including $0.99, $1.04 and $1.09.
• Billing increments – vary, from 1 to 3 minutes, with connect fee is applied at the second minute.
• Call origination allowed -- US-48 states, plus Hawaii and Canada.
• Multilingual technical support – no.

It then warns, “Due to intrastate regulation when making a call within a single state, such as calling from one city to another in Texas, add 2 cents per minute to the stated USA rate.”

https://www.zaptel.com/zaptel/index.cfm?fuseaction=customer.zap_rate_finder&from_country=1&to_country=160&show_all=true

People have long complained about the numerous rip-offs associated with prepaid international calling cards.  In 2015, the FCC fined six of these scamsters -- Locus Telecommunications, Lyca Tel, NobelTel, Simple Network, STi Telecom Inc. and Touch-Tel -- a $5 million each for false advertising. The FCC noted, “the companies marketed the calling cards to immigrant consumers by promising that a few dollars could pay for hundreds or thousands of minutes in international phone calls.”  

http://www.law360.com/articles/717161/fcc-raps-6-calling-card-telecoms-with-30m-fine

Sadly, these cases took years to adjudicated, having started in 2011 and 2012.  The wheels of justice grind slowly and no one knows all those still getting screwed by prepaid calling card rip-offs.  Equally sad, the scams perpetrated against those calling Ghana is being played out against immigrants, tourists and other calling throughout the world.