FCC Proposes $5 Million Fine For Prepaid Calling Card Company

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By Paul Barbagallo

The Federal Communications Commission released an order Oct. 2 proposing a $5 million fine against NobelTel LLC, a provider of prepaid calling cards, claiming the company deceived consumers, particularly immigrants.

After an investigation, the FCC found that a $2 card offering 400 minutes of calls to Mexico expired after just one 10-minute call, due to different fees, such as “daily” and “hang-up” fees assessed after the call was completed.

NobelTel's advertising did contain disclosures, but only in small type and the ads were not clear about when the fees would apply, the FCC said. The only possible way consumers might be able to make calls of 400 minutes—nearly seven hours—was if they made a single call that long length, the commission noted.

“As this action makes clear, we remain vigilant in our effort to crack down on prepaid calling card scammers who engage in deceptive marketing,” FCC Chairman Julius Genachowski said in a statement. “Millions of Americans depend on prepaid calling cards to connect with family and friends around the world, and the FCC will not tolerate predatory schemes that include unfair or unclear fees. The commission will continue to monitor marketing activities around prepaid calling cards—and will not hesitate to take decisive action when warranted.”

The FCC's Enforcement Bureau has been vigilant against deceptive marketing for calling cards in the past year, issuing $30 million in fines against six companies.

For the FCC's order, visit http://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0928/FCC-12-120A1.pdf.