Pre-paid phone
cards represent telephone time you buy in advance. you pay from $5 to
$15 or more up-front for local or long-distance phone time; the amount
of time you buy depends on the rate-per-minute you’re charged. For many
people, pre-paid phone calls offer the ultimate in convenience. The
phone time’s been paid for in advance; the card can be used from any
phone; and there’s no need to think about carrying coins or paying a
bill later on.
First marketed as clever novelties, pre-paid phone cards now
are sold at newsstands, post offices, travel agencies, retail stores,
and grocery and convenience stores. They are used mostly by travelers,
students, people who regularly call overseas, and those who may not
have long-distance telephone service. Some pre-paid phone cards can be
recharged, usually by billing the additional cost to your credit card.
And some cards have advanced features like speed dialing for frequently
called numbers and an activity report of called numbers, which may be
handy for business purposes.
Occasionally, pre-paid phone cards have a hidden cost: because you’ve
paid up-front, you may be out of pocket – and out of luck – if you
discover a problem trying to use the card. That’s a big difference
between pre-paid phone cards and traditional long distance calling
cards and traditional long distance calling cards, where charges don’t
appear on your bill until after you’ve made the call. Some issuers
provide a replacement number on a separate document when you buy the
card. If your card is lost or stolen, give the issuer the number to
recover your unused calling time.
How Pre-Paid Calling Cards Work
Most pre-paid phone cards display a toll-free access telephone number
and a personal identification number (PIN). Pre-paid phone card
companies have computers that use your PIN to keep track of your card
usage – how much phone time you have on your card in minutes or units.
To make a phone call, you dial the access number, enter your PIN, and
at the voice prompt, enter the phone number of the party you’re trying
to reach. A computer tells you how much time – or how many units – you
have left on your card, and how to use other features you r card may
offer. Typically, each nit equals one domestic minute. If your pre-paid
phone card can’t be recharged – that is, if you can’t buy additional
minutes by phone for the card – you’ll need to buy another card once
you’ve used up the time or minutes.
Several key players are involved in making sure your phone card works:
- Carriers are responsible for the telephone lines that carry your calls.
- Resellers buy telephone minutes from carriers.
- Issuers set the rates and provide toll-free customer service and access numbers.
- Distributors get the cards to retailers.
- Retailers sell the cards.
Carriers
and resellers can issue their own pre-paid phone cards; but if they
don’t issue the cards, they’re not likely to be responsible for any
problems you may have.
When you buy a pre-paid phone card from a store, it’s
important to remember that you’ve bought a telephone service, not a
product. The store doesn’t control the quality of the service. To make
sure you’re getting what you’ve paid for, you may wan to buy a small
denomination first to test out the service, and check with friends or
relatives to find out their experience with the card.
Consumer Concerns
As the pre-paid phone card industry mushrooms, and as more people buy
and use the cards, some problems are coming to light. The most common
consumer complaints are about:
-
Access number or PINs that don’t work;
- Issuers who go out of business, leaving card-holders with a useless card;
- Customer service numbers that are busy or simply don’t work;
- Toll-free access numbers that are constantly busy, preventing use of the card;
- Rates that are higher than advertised
- Hidden connection charges, taxes and surcharges;
- Cards that debit minutes or units even when you don’t connect with the party you’re calling; and
- Poor quality connections.
Buying Time and Value
Consumers can avoid many of these problems – and buy considerable peace
of mind – by planning ahead. Although many pre-paid phone cards are
impulse purchases, you can preempt disappointment by checking out a few
things in advance:
- Ask if the retailer will stand behind the card if the telephone service is unsatisfactory.
- Look
for the rate for domestic and international calls on the card’s package
or on the vending machine. These rates may vary depending on where you
call. If you can’t find the rate, call the card’s customer service
number.
- The pre-paid phone card industry is highly
competitive. Beware of very low rates, particularly for international
calls. They may indicate poor customer service.
- Look for
disclosures about surcharges, monthly fees, pre-call access, and the
like, in addition to the rate-per-minute or unit. Some cards add a
surcharge to the first minute of use. Others charge an activation fee
for recharging cards.
- Check on expiration dates. Most
cards expire one year after first use. If there is no expiration date,
a card usually is considered “live” until all phone time is used.
- Look
for a toll-free customer service number. If the customer service number
isn’t toll-free or displayed, it may be difficult to contact the
company if you have a problem with the card. A busy signal on the
customer service line may be s tip of t a rip-off.
- Be sure the card comes with instructions that you understand.
- Make
sure the card comes in a sealed envelope or has a sticker covering the
PIN. Otherwise, anyone who copies the PIN can use the phone time you’ve
already paid for.
- Ask friends and relatives for references on the card you’re thinking of buying.
Consider these questions: - Were they charged for a call when there was no answer or when the line was busy?
- Was
there a minimum charge for each call? For example, were charges based
on a minimum of three minutes even though the call lasted 30 seconds?
- Was the access number inaccessible because of a constant busy signal?
Selling Cards
If you want to distribute pre-paid phone cards or sell them in your
store, the same considerations apply. Ask the company for references of
the company providing the phone time and try to determine the
competitiveness of the rates being offered. Extraordinarily low rates
may not result in high quality service, and may be offset by
undisclosed charges. Consumers are more likely to return to your store
expecting a refund if the cards they bought don’t work.
For more information
If your card doesn’t work even after you’ve called the customer service number, all or write to the following organizations:
- Your local Consumer Affairs Department or state Attorney General.
- Your local Better Business Bureau to file a complaint or get a report based on customer experience.
- The Federal Trade Commission, Division of Service Industry Practices, Washington, D.C. 20580. (202) 326-2222
For information on a variety of topics of consumer interest, contact:
-
Best Sellers, Federal Trade Commission, Public Reference, Washington,
D.C. 20580, or visit ConsumerLine on the World Wide Web at www.ftc.gov.
- American Express Company, P.O. Box 4635, Trenton, NJ 08650-4635. Or access American Express at www.americanexpress.com.