Now might be the time to consider running those prepaid calling cards through the shredder.
The Federal Communications Commission issued a temporary halt on the industry's deceptive advertising practices this month, following a Consumer Reports study on how they take advantage of international callers, and low-income immigrants in particular.
In reviewing 130 cards, Consumer Reports found there's no telling what callers will get until they actually place the call. Many cards reviewed were rife with undisclosed fees and surcharges, making it nearly impossible for customers to be informed buyers.
One company Consumer Reports reviewed had gone out of business, while other cards hadn't been activated for use. Still another card purchased in January 2012 promoted a contest that had ended two years ago.
Marketed under names like "Africa Magic," "Hola Amigo," and "Viva Ecuador," the cards are sold everywhere and advertised in print and online. For immigrants looking to call distant relatives in countries like Argentina, Pakistan, Poland, and Nigeria, the $2 and $5 cards often represent the only way to stay in touch.
In a recent press conference, the Federal Trade Commission said it's seeking a court order to stop the deceptive practices and vowed to work closely with the New York State's Attorney General's office and FCC to clamp down on the problem.
Until the issue's resolved, however, Consumer Reports has put out these useful tips to help you get the most for your money:
Look for alternatives. Whether it's a Web-based service like Skype or signing up for your cell phone provider's international call plan, seek out a service with transparent fees—and lower costs. Over time, buying several prepaid cards each week could rack up more than $100 a year.
Watch out for cards selling "units." You want minutes, not units which could give you much less. And go with a no-fee card from a national retailer if you make infrequent calls, says the site.
Check the expiration date. Don't fork over cash for a card that's invalid. Likewise make sure the PIN is still intact and that its coating hasn't been removed prior to purchase.
Buy only what you need. Overstocking on cards is a no-no, says the site, which points out that some "start the clock on expiration from their activation date at the store." Given that some of these card companies are fly-by-night operations, they could go out of business suddenly, leaving you and your card off the hook.
To report shady prepaid calling cards, call the FCC (888-CALL-FCC), FTC (877-FTC-HELP) or your state attorney general's office. For the rest of Consumer Reports' tips, visit its site.
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