Immigrants Ripped Off by Phone Cards

12/23/07

They can be seen hanging behind the counter at the mini-mart, those brightly colored phone cards for calling Latin America, Africa and Asia. Often, they are the only reliable way for immigrants to stay in touch with their families.

But many buyers of these cards are being ripped off to the tune of millions of dollars a year.
Some cards fail to deliver the promised minutes. Others tack on confusing fees that may not be listed in the microscopic print on the back of the card. Still others round up each call to the nearest three-minute mark.

"Sometimes they give you all the minutes. Sometimes they don't. Then you have to switch to a new card,"
said Augusto Revolorio, a Miami Beach grocery stocker. He buys the $2 or $5 cards regularly to call his mother and four brothers in Guatemala. "It costs me more to complain on the phone and be late for work, so I just rip up the card and buy a new one."

A 2004 study led by University of Georgia economics professor emeritus Julia Marlowe found that the cost-per-minute rates for prepaid calling cards were on average 87 percent higher than those advertised.

But because many immigrants like Revolorio don't have time or are afraid to go to authorities to complain and the money they lose per card is small little has been done to crack down.

"Every time I check, the telecommunications industry is a highly regulated industry. This one they don't want to regulate," said Gus West, head of the nonprofit Washington-based Hispanic Institute.

That's beginning to change. In the past year, attorneys general in Florida, California and several other states have begun to take a closer look at the phone card industry, as has the Federal Trade Commission. In October, Rep. Eliot Engel, D-N.Y., introduced legislation to regulate the business.

The push comes in part from an unlikely source communications giant IDT Corp. The Newark, N.J., company settled its own decade-long class-action lawsuit in January over allegations it failed to adequately disclose its charges. Now, it is leading the call for regulation at the state and federal level.

"What we'd like to see is an honest industry, where everyone is held to the same standard that we hold for ourselves," IDT head Jim Courter said.

The most popular cards among immigrants and the ones least likely to deliver promised minutes are those offering super cheap rates to countries such as Mexico, Guatemala, Haiti and India.

Norbert Dominguez of Miami said he buys about six $10 cards a month to stay in touch with his mother and 4-year-old daughter in Cuba. Each card promises 18 minutes but usually delivers closer to 12, he said. That's an actual cost of about 83 cents a minute, versus the promised 55 cents. Still, it is cheaper than the typical long-distance telephone rate of $1.15 a minute.

"It's the cheapest way to call because other ways are very expensive, but in the end, they're still swindling us," Dominguez said.

Dominguez said he has complained with little success. "They give you a customer service rep, but it's never someone with authority," he said.

An AP reporter had a similar experience when asking about a hot-pink card $5 card emblazoned "Pa' Llamar" (For Calling) that delivered only 60 of 148 promised minutes to Central America. Miami-based Blackstone Calling Cards, the company that advertises and distributes the cards, referred the reporter to ADMA Telecom, which provides the actual connection.

An ADMA customer service agent who identified himself only as Ernesto said the company's overtaxed computer system sometimes misreads the call destination.

"If you are calling for Nicaragua it could charge you the rate for Haiti. The caller has to call us and tell us that there was an inconvenience with the call, and we fix the problem," he said.

When pressed for more details, Ernesto referred the reporter to a supervisor, who in turn gave another phone number Blackstone's.

Oscar Munera, an independent distributor of calling cards, said that despite the problems, the cards are a bargain.

"Fifteen years ago, you couldn't even call Colombia because it was so expensive. Customers are never satisfied," he said. He said people could avoid problems if they read the fine print.

But the fine print isn't always available, readable or in the consumer's native language.

"There is so much variation in cards and fees that you can't just go to a store, look through the selection and make an informed choice," the University of Georgia's Marlowe said.

Engel's bill would require clear and standardized disclosures of all charges on the back of the card or in ads, ensure companies provide promised minutes and prohibit charges for unconnected calls.

"We're not attempting to have huge regulation, but I just want the average person to know what they're getting," the congressman said.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

3 comments:

CC Expert said...

Good article, look at the report done by Teh Hispanic Institute and Network Analytics at:
http://thehispanicinstitute.net/files/Test%20Plan.pdf

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