Prepaid Card Firms Face $20M Fine

FCC announces $20 million in proposed penalties against companies believed to be involved in deceptive marketing of prepaid calling cards

September 2, 2011

1 Min Read

WASHINGTON, D.C. -- The Federal Communications Commission today proposed forfeitures totaling $20 million from STi Telecom Inc. (formerly Epana Networks, Inc.), Lyca Tel, LLC, Touch-Tel USA, LLC and Locus Telecommunications, Inc. for apparently violating the Communications Act by using deceptive marketing practices to sell prepaid calling cards, scamming consumers out of millions of dollars, mostly from low-income and minority communities. The FCC is proposing $5 million in forfeitures for each company.

Under Commission precedent, unfair and deceptive marketing is an unjust and unreasonable practice that violates section 201(b) of the Communications Act. In today’s cases, the Commission found that the apparent violations were particularly egregious. Each of the companies involved had made claims that, with a card costing only a few dollars, buyers can make hundreds if not thousands of minutes of calls to foreign countries – when in fact, because of the multiple fees and surcharges assessed, they will be able to use only a fraction of those minutes. Moreover, the Commission found that the companies apparently did not clearly and conspicuously disclose the fees to consumers.

FCC Enforcement Bureau Chief Michele Ellison said: “Every day, people – many of them from our most vulnerable communities – rely on prepaid calling cards to connect with friends and family around the world. The orders released today detail the misleading practices -- from illegible fine print to impossible-to-calculate fees – that some companies appear to use to sell their cards. We hope that these cases lead all prepaid card providers to reexamine their marketing practices to ensure that they are treating consumers fairly.”

Federal Communications Commission (FCC)

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