Hidden fees in phone cards

CHOICE uncovers the hidden traps with international prepaid phone cards and what their blaring posters don’t tell you.
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03.New Industry Guidelines for Prepaid Calling Cards

The TIO received 906 complaints in the year to June 2008 for misleading and out-of-date calling rates advertised by phone card companies, compared with 561 the previous year. In March, the ACCC took Tel.Pacific to court for breaching the Trade Practices Act by advertising that a total number of minutes were available on its prepaid phone cards, when in fact the time could not be achieved because of undisclosed fees and charges. The ACCC said the advertised minutes on one of Tel.Pacific’s cards were only available if one continuous call longer than 33 hours was made, which was “neither practical nor realistic”.

Tel.Pacific was ordered to display clearly and accurately all fees in its future advertising. An ACCC spokesman told CHOICE: “The court action initiated by the ACCC against a phone card company was the first of its kind, sending out a clear message that such practices at the detriment of consumers are not tolerated.”

In May, Tel.Pacific’s biggest competitor, Cardcall, was similarly taken to task for misleading ads on its Talk Tomato, Daybreak, OZcall and It’s Green phone cards. The Federal Court ordered the company to withdraw the offending ads and post a general guide to extra fees for phone cards on its website, as well as at its distributors’ retail outlets. In July, the ACCC took similar court action against Prepaid Services, Optus’ prepaid phone card subsidiary.

The problem is not unique to Australia. Phone card companies in the US have been penalised between $US1.3m and $US2.25m for engaging in false and deceptive advertising of the total minutes available on phone cards, as well as for not prominently disclosing extra charges.

New Industry guidelines — the solution?

In August, the new Industry Guidelines for Prepaid Calling Cards were released by the Communications Alliance — the peak body for the Australian communications industry —stipulating that phone card companies must not advertise a total number of minutes as being available if those minutes can only be realised in one phone call. All extra fees must also be detailed in brochures and posters, in readily readable colours and font. However, this move to greater transparency, while welcome, doesn’t necessarily give consumers a better deal.

For a start, not all posters can realistically be displayed for consumer reference. Cardcall’s chief executive officer, Steve Picton, told CHOICE: “I think the problem is when phone card companies add lots and lots of terms and conditions, which can be confusing for the consumer.”

CHOICE calls on all prepaid phone card companies to abolish confusing and misleading add-on fees and compete directly on the charge per minute offered by each card.


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