Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Seller of Prepaid Calling Cards Settles FTC Charges, (May 3, 2013)
Organizations Mentioned:DR Phone Communications, Inc.
By Jeffrey May, J.D.
The FTC announced today that DR Phone Communications, Inc. has settled charges that the company engaged in deceptive marketing of prepaid telephone calling cards. A consent decree was approved by the federal district court in San Francisco on April 25 (FTC v. DR Phone Communications, Inc., FTC File Nos. 112 3073 and X120029, Case No. C-12-2631-SC).
Under the terms of the consent decree, DR Phone and related entities have agreed to refrain from making any material misrepresentations in connection with the marketing and sale of prepaid calling cards. They also are required to clearly and prominently disclose all material limitations of their prepaid calling cards.
In addition, the consent decree requires the defendants to put procedures into place for five years to ensure the accuracy of their marketing materials and to prevent retailers from displaying expired marketing materials. They also are required to end their relationships with any distributor who does not display accurate marketing materials.
The consent decree resolves an FTC complaint brought in May 2012. The FTC sued the calling card marketer for misrepresenting the number of calling minutes its cards provided and failing to adequately disclose additional fees. The FTC sought a permanent injunction and an order requiring the company to give up its ill-gotten gains.
The agency contended that it tested 169 of the company's cards. According to the FTC, 100 percent of the tested cards failed to deliver the number of minutes advertised. On average, the 169 cards delivered only 40.42 percent of the advertised time, it was alleged.
In addition to FTC efforts to address deceptive advertising and marketing practices in the prepaid calling card industry, federal lawmakers have in recent years proposed legislation that would require accurate disclosure of calling card terms and conditions. While legislation has not yet been introduced this term, measures were introduced in the last few Congresses but failed to pass both houses.
Companies: DR Phone Communications, Inc.
News: ConsumerProtection FederalTradeCommissionNews