Prepaid Phone Cards: What Consumers Should Know

Background

A prepaid phone card is, as its name suggests, a card that a consumer buys for a flat fee in order to make long distance telephone calls. The cards are often advertised as enabling buyers, for a fee of several dollars, to make a specified number of minutes of calls to a certain destination; for example, "$5 for 1000 Minutes to Guatemala." You use the card by calling an access number, which can be either a local telephone number or toll-free number, and you will then be prompted to provide your personal identification number (PIN) and the telephone number you wish to call. An automated voice may also tell you how much time you have left on your card, and may also give you other information or options.

Before buying a prepaid phone card, you should know that the FCC and other federal and state agencies have taken enforcement action against certain distributors or providers of these cards. The FCC's actions have proposed to penalize certain prepaid card providers a total of $30 million for misleadingly advertising that, for a fee of just a few dollars, with the cards, buyers can make hundreds or thousands of minutes of calls to certain advertised destinations. In fact, in these cases, for that fee, a consumer using a card can make calls for only a fraction of those minutes due to the provider's assessment of multiple fees and surcharges that are not clearly and conspicuously disclosed. For that reason, before buying a prepaid phone card, consumers should be particularly careful to ensure that they fully understand all of the terms and conditions associated for the card, as discussed below.

What Should Consumers Look For Before Purchasing a Prepaid Phone Card?

Particularly in light of the problems consumers have reported, before buying a card, you should:

make sure that you understand the instructions on how to use the card;
read the fine print on the packaging or back of the card to understand any conditions or limitations on the use of the card;
make sure that you understand the rates for your particular phone card;
make sure that you understand the fees that may be assessed to use the card, such as whether, and if so, by how much, the card's value will be reduced by any "post-call," "disconnect," or hang-up" fees after each time you use the card, or by a "maintenance" fee charged after you use the card for the first time and again at regular intervals;
check whether the advertised minutes for the card apply only to a single call or over the course of multiple calls;
check the card's expiration date to avoid losing unused minutes;
look for a toll-free customer service number provided with or on the card, and ensure that, if you use a toll-free access number to place a call, you will not be charged for doing so; and
ask your friends and family to recommend cards they have used with which they had a positive experience.

Common Complaints Associated with Prepaid Phone Cards

As pre-paid phone cards are increasing in popularity, some common complaints are:

access numbers and/or PINs that don't work;
service or access numbers that are always busy;
card issuers that go out of business, leaving people with useless cards;
rates that are higher than advertised, or contain undisclosed fees;
imposing undisclosed "post-call" fees deducted after a call's completion;
imposing undisclosed "maintenance" fees deducted after a call or at regular intervals;
cards that charge you even when your call does not go through;
poor quality connections;
cards that expire without the purchaser's knowledge; and
per-call fees deducted from the time.

What Should I Do if I Have a Problem with a Prepaid Phone Card?

First, try contacting the card issuer, who is usually listed on the back of the card (or who can be identified by calling the customer service number listed on the card). If that doesn't work, you can file a complaint with the FCC. You can file your complaint using an FCC online form.

You can also file your complaint with the FCC's Consumer Center by calling 1-888-CALL-FCC (1-888-225-5322) voice or 1-888-TELL-FCC (1-888-835-5322) TTY; faxing 1-866-418-0232; or writing to:

Federal Communications Commission
Consumer and Governmental Affairs Bureau
Consumer Inquiries and Complaints Division
445 12th Street, SW
Washington, D.C. 20554.

What to Include in Your Complaint

The best way to provide all the information the FCC needs to process your complaint is to complete fully the online complaint form. When you open the online complaint form, you will be asked a series of questions that will take you to the particular section of the form you need to complete. If you do not use the online complaint form, your complaint, at a minimum, should indicate:

your name, address, email address and phone number where you can be reached;
the names and phone numbers of any companies involved with your complaint (it's a good idea to provide ALL of the information obtained on the calling card at issue, including any associated information that came with the card);
the amount of any disputed charges, whether you paid them, whether you received a refund or adjustment to your bill, the amount of any adjustment or refund you have received, an explanation if the disputed charges are related to services in addition to residence or business telephone services; and
the details of your complaint and any additional relevant information.

For More Information

For information about other communications issues, visit the FCC's Consumer and Governmental Affairs Bureau website, or contact the FCC's Consumer Center using the information provided for filing a complaint.

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Prepaid Phone Cards: What Consumers Should Know Guide (pdf)

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