U.S. House of Representatives Pass Calling Card Legislation that Affects Arab Americans Calling Abroad
Legislation attempts to force disclosure of hidden fees
On October 6th the U.S House of Representatives moved to force companies that sell or distribute prepaid calling cards to describe any fees associated with the cards on packaging and in advertising. The legislation declared that the calling card industry is "plagued by fraudulent and deceptive business practices," and this new legislation is an attempt to combat that. The bill passed with an overwhelming majority. Since Arab Americans make up a sizeable percentage of international callers, this legislation will have a profound effect on them.
The legislation came after the Federal Trade Commission (FTC) launched an investigation into the industry. The investigation concluded that card companies only deliver an average of 60% of the minutes promised due to charges that are hidden from the consumer. National Consumers League Executive Director Sally Greenberg stated in testimony to the FTC, "[The calling card industry] is a 'Wild West' of sellers and merchants who too often prey upon the most vulnerable consumers by promising minutes they don't deliver and loading up on hidden or undisclosed charges and fees."
The bill, H.R.3042, was sponsored by Rep. Eliot Engel, D-N.Y. "This is just a good consumer protection bill," Engel said, prior to the vote. "And it has to be federal because if you have a hodgepodge of states all with different laws, it really doesn't work. You really need something uniform." The bill has not yet been passed to the Senate.
While the new bill requires calling card companies to disclose their rates in fine print to consumers, it doesn't place any limits on how bad the rates and terms of a deal can be. A typical example of a calling card cited by the FTC, Africa Sky card's terms include, "Use of a toll free number from a pay phone will incur a $.99 per call fee. Call time for multiple calls is calculated by rounding the last minute up to the closest multiple of 3 and then adding 1 minute except that if your call lasts less than 1 minute you will be charged only for a minute."
It is estimated that fraudulent calling cards may be costing Arab Americans up to $25,000 every day. More often, the Arab American community is turning to other providers of inexpensive calling services including Rebtel which charges solely on a per minute basis with no other fees or connection charges. "It was precisely because of the rip off schemes we've noticed with calling cards that drove us to build a new service that people could trust," says Rebtel CEO Hjalmar Winbladh.
Greenberg, however, doesn't believe the bill goes far enough. She states, "While [the bill] requires that the disclosure text on the calling card itself, packaging, or other promotional material (including online) be in same language used to advertise the card, we would recommend expanding [the bill] to require that prepaid phone card providers provide toll-free customer service lines staffed by customer service representatives able to converse in the languages that the cards are advertised in."
These gaps, says Greenberg, along with lax requirements for businesses to enter the calling card industry, will continue to make it difficult for consumers who use calling cards to ensure they're getting a fair deal. "The most vulnerable consumers—military families, immigrants, low-income families —rely on these cards and spend their hard-earned money only to see the value of the cards disappear quickly after first use," says Greenberg.
Winbladh sees the legislation as a major step forward in the demise of calling card fraud, "The Arab American community wants quality and honesty at affordable rates; this is the main reason why we have seen major growth from the community over the past year."
