Phone card distributor will pay $1.3 million
July 1st, 2009 joshua
A New Jersey-based pre-paid calling card distributor has agreed to pay a $1.3 million fine because it made false claims about its products.
The Federal Trade Commission conducted its own investigation into the pre-paid cards offered by Clifton Telecard Alliance One LLC and its owner, Mustafa Qattous, fell short on their claims.
The FTC found that the cards only offered half the minutes advertised and that using the cards often subjected consumers to hidden fees. Calls not connected were also charged to the card.
Clifton calling cards are marketed across the country under various names, but its two most popular cards were sold as “African Dream” and “CTA Mexico”. The cards are available primarily alongside numerous other cards in gas stations and groceries. They are popular with immigrants to the U.S. to stay in touch with relatives elsewhere.
The cards were available in denominations of $2 and as high as $20.
A judge overseeing the case actually fined CTA more than $24 million, but waived a large portion of that penalty. The company must properly and accurately advertise the amount of minutes a consumer receives with a card, and must also ensure people know of the company’s charges for certain calls.
