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Make the Most of Your Minutes and Avoid Deceptive Prepaid Phone Cards

9/4/2009

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Prepaid calling cards may seem like a great value, claiming to provide hundreds of minutes for a few dollars. However many phone cards are so rife with fees and service charges that they deliver far fewer minutes than advertised. Better Business Bureau offers advice on how to get the most out of a prepaid phone card while avoiding getting ripped off.

Prepaid phone cards are widely available at stores, newsstands, and online. Some cards are meant for one-time use and can be thrown away when the minutes are used up. Others can be recharged and have more minutes added by using a credit card. According to the Federal Trade Commission (FTC), prepaid phone cards are a $4 billion per year industry. However, a 2007 survey by the Hispanic Institute found that prepaid phone cards delivered only 60 percent of the minutes promised and that fraudulent phone cards were swindling people out of about $1 million every day.

“Many people rely on prepaid phone cards as an inexpensive and easy way to stay in touch with loved ones here and in other countries,” said Steve Cox, BBB spokesperson. “Not all cards are created equal though, and many are deceiving customers with promises of hundreds of minutes that are ultimately whittled away by numerous and exorbitant fees.”

As part of a national crackdown on the prepaid phone card industry, the FTC has already gone after several companies for deceiving customers. Allegations against companies include lying about the amount of minutes available on cards and failing to disclose the cost of maintenance fees. In one example, a card from Diamond Phone Card, Inc., claimed to deliver 400 minutes to Mexico but provided only 106 minutes of calling time after fees and service charges were assessed.

BBB offers the following advice for getting the most for your money when buying a prepaid phone card:

• Read the disclosures about expiration dates, surcharges, maintenance fees and any fees that might vary based on where you are calling to and calling from. 

• Find out the rates for both domestic and international calls. Be wary if the rates aren’t posted on the card or with associated advertising or displays.

• Compare rates, but don’t be immediately sold by a low rate. Very low rates may be enticing, but they should also serve as a red flag that the card may not deliver the number of promised minutes.

• The card should come in sealed packaging that has not been tampered with, or should have a personal identification number (PIN) that is not visible or revealed – make sure the protective coating covering PINs has not been scratched off. Cards and packaging that have been tampered with run the risk of having had the identification numbers stolen and used before a buyer can use the card. 

• Always check out the phone card company with BBB first at bbb.org to make sure it has a good reputation for satisfying customers.
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