Prepaid Calling Cards

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.

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, 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.

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 want 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 numbers 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
• 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, per-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 a tip off to 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?

For More Information

If your card doesn't work even after you've called the customer service number, contact your local Better Business Bureau to file a complaint or get a report based on customer service.

If you continue to have a problem with your service after trying to get your service provider's attention, contact the consumer protection division of your state Attorney General. You can also file a complaint by calling the Federal Trade Commission Consumer Response Center toll-free at 1-877-FTC-HELP (382-4357)or filling out the Federal Trade Commission Consumer Complaint Form online.

General Consumer Rights Message Board for more help