Consumers Warned About Phone Card Promotions

Attorney General Spitzer today announced an agreement with an Oneida County businessman who deceptively advertising pre-paid telephone calling cards.

As part of the settlement, Frederick P. Reynolds, Jr. has agreed to sponsor publication of consumer tips in local newspapers. The ads will instruct consumers on how to obtain the best value when purchasing phone cards.

"Consumers must scrutinize all offers for telecommunications services," Spitzer said. "They should be particularly wary of hidden fees and other costs associated with telephone calling cards."

Spitzer's office began an investigation of Reynolds' business in September 1999. Reynolds operates Televend, Inc., a Whitesboro-based company that sells phone cards from vending machines placed in supermarkets and convenience stores.

The investigation revealed that consumers were lured into buying the phone cards because of large signs that advertised calling rates as low as 3.9 cents per minute. It was not disclosed, or it was disclosed in extremely fine print or on hard-to-read signs, that there were other fees and connection charges that greatly increased the price of a call. Consumers also were not informed that small balances on the phone cards would be forfeited if the amount was less than the minimum service fee.

In settling the case, Reynolds agreed to disclose all applicable charges, fees and costs associated with the cards. Reynolds will also spend $4,000 to sponsor public service advertisements providing tips to consumers about the purchase and use of pre-paid phone cards. These tips include:

  • Read the prepaid phone card and any instruction sheet before buying a card;
  • Look for connection fees, pay phone surcharges and other costs as well as the rate per minute;
  • Make sure the card has a toll-free 24 hour customer service number;
  • Find out whether the card is "rechargeable" or whether the value on the card can be transferred to avoid having an unusable balance;
  • Buy only one card of small denomination and test it if you have not used the brand before; and
  • Keep track of your phone card calls and look for charges for uncompleted calls and for unexplained charges unrelated to calls.

Individuals with complaints about pre-paid phone cards are encouraged to contact the Attorney General's office by calling the consumer help line at (800) 771-7755.