The Calling Card Consumer Protection Act

H.R. 3402, commonly known as the 'Calling Card Consumer Protection Act' passed the House in October and is now slated for Senate consideration and possible action in 2009.

As it stands now, the Calling Card Consumer Protection Act was approved in large part due to significant reports by consumers of questionable and possibly fraudulent practices by some providers in the industry.

Prior to passage of H.R. 3402, the calling card industry has been able to avoid any significant regulation of its practices and how it conducts business. Unfortunately this has meant that some unscrupulous providers have been taking advantage of consumers, enough so that Congress finally acted, even during the significant financial crisis that has consumed all of Washington.

The groups most identified as being affected by deceptive calling card practices have been low income people who cannot afford traditional phone service, military families and most particularly low income immigrant groups. Responding to complaints that some companies are charging users for minutes on calls that don't result in a connection, that some calls are cut off so that users are forced to burn more minutes by having to reconnect to the original connection, that no customer service numbers are listed to contact calling card providers, that service operators don't speak the language of the people using the cards, the following regulations have been put in place:

• That the actual terms and conditions surrounding the purchase and use of the calling card are made known.
• That the name of company that is issuing the calling card is disclosed, that there is an actual contact number for contacting customer service and that the hours for reaching customer service is listed.
• That the consumer is clearly informed as to how many actual minutes of phone usage has been purchased and/or the dollar value of minutes is indicated.

In order to specifically address outright fraudulent practices, providers are now prohibited from: charging for unconnected calls, adding any charges or fees not specifically outlined in the terms and conditions of the card purchase agreement, not providing the users with the actual minutes contracted with/purchased by the consumer under the terms set out in the purchase agreement.

Since state regulation of the industry has been spotty at best and since good calling card companies are often hurt by fraudulent practices of bad calling card providers (due to loss of market share), the enforcement of this act would be up to the Federal Trade Commission and violations will be treated as an unfair or deceptive act or practice under the Federal Trade Commission Act.

Now that H.R. 3402 is going to be considered in the Senate, it will be interesting to see whether certain consumer protections will be increased or diluted. If the new Senate composition changes in November 2008, then it is very likely that H.R. 3402 will stand as is or have it's protections strengthened. Ultimately, H.R. 3402 is a safeguard against possible deceit by companies who offer prepaid calling cards, and the creation of this bill is said to be a result of years of alleged manipulation by these companies.