BOSTON – Senator John Kerry today announced that he is co-sponsoring legislation aiming to protect consumers from deceptive calling card practices. A recent Federal Trade Commission (FTC) investigation found that calling card companies routinely charged customers for calls when busy signals are reached, imposed weekly “maintenance fees” that deduct up to 20 percent of the card’s value and billed customer calls in 3-minute increments. 

The Prepaid Calling Card Consumer Protection Act of 2008, introduced by Senator Bill Nelson (D-Florida), would require the federal government to monitor and prevent deceptive practices by prepaid calling card providers.

The Federal Trade Commission estimates that annually the industry sells $4 billion in calling cards, many of them going to our military men and women overseas.

“Calling cards connect our military overseas and their families and friends back home,” said Senator Kerry. “The companies selling these cards have a responsibility to provide reliable information about rates and hidden fees so that consumers can make an informed decision. The fact that our military families are openly being deceived by these companies is totally unacceptable, not to mention other low income communities that rely on these cards to communicate with loved ones. I strongly urge my colleagues to stand up for consumers and support this legislation.”

Under the act, the FTC would be required to establish rules requiring all prepaid telephone card providers and distributors to disclose all rates and fees, in the language used for the card or associated advertising, at the time of sale. More specifically, card distributors would be required to disclose interstate per-minute rates, international preferred destination rates, and all fees and surcharges. In addition, the companies must honor the cards for at least one year after first use unless another expiration date is clearly disclosed.

The bill gives the FTC the authority to punish fraudulent businesses. The FTC, state attorneys general and state consumer advocates also could sue companies who fail to comply with requirement in federal court.

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