Sunday, November 11, 2007

Essay 4690

From The Chicago Sun-Times…


Immigrants lose millions in calling card ripoffs

STUDY | Per minute cost 87% higher than advertised


MIAMI -- They can be seen hanging behind the counter at the mini-mart, those brightly colored phone cards for calling Latin America, Africa and Asia. Often, they are the only reliable way for immigrants to stay in touch with their families.

But many buyers are being ripped off to the tune of millions of dollars a year.

Some cards fail to deliver the promised minutes. Others tack on confusing fees that may not be listed in the microscopic print on the back of the card. Still others round up each call to the nearest three-minute mark.

“Sometimes they give you all the minutes. Sometimes they don’t. Then you have to switch to a new card,” said Augusto Revolorio, a Miami Beach grocery stocker. He buys the $2 or $5 cards regularly to call his mother and four brothers in Guatemala. “It costs me more to complain on the phone and be late for work, so I just rip up the card and buy a new one.”

A 2004 study led by University of Georgia economics professor emeritus Julia Marlowe found that the cost-per-minute rates for prepaid calling cards were on average 87 percent higher than those advertised.

Because many immigrants like Revolorio don’t have time or are afraid to go to authorities to complain -- and the money they lose per card is small -- little has been done to crack down.

“Every time I check, the telecommunications industry is a highly regulated industry. This one they don’t want to regulate,” said Gus West, head of the nonprofit Hispanic Institute in Washington, D.C.

That’s starting to change. In the last year, attorneys general in Florida, California and several other states have begun to take a closer look at the phone card industry, as has the Federal Trade Commission. In October, Rep. Eliot Engel (D-N.Y.) introduced legislation to regulate the business.

Engel’s bill would require standardized disclosures of all charges on the back of the card or in ads, ensure companies provide promised minutes and prohibit charges for unconnected calls.

The push comes partly from an unlikely source -- communications giant IDT Corp. The Newark, N.J., company settled its own decade-long class-action lawsuit in January over allegations it failed to disclose its charges adequately. Now, it is leading the call for regulation at the state and federal level.

The most popular cards among immigrants -- and the ones least likely to deliver promised minutes -- are those offering super cheap rates to countries such as Mexico, Guatemala, Haiti and India.

Norbert Dominguez of Miami said he buys about six $10 cards a month to stay in touch with his mother and 4-year-old daughter in Cuba. Each card promises 18 minutes but usually delivers closer to 12, he said. That’s an actual cost of about 83 cents a minute, vs. the promised 55 cents. Still, it is cheaper than the typical long-distance telephone rate of $1.15 a minute.

“It’s the cheapest way to call because other ways are very expensive, but in the end, they’re still swindling us,” Dominguez said.

Dominguez said he has complained with little success. “They give you a customer service rep, but it’s never someone with authority,” he said.

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