WASHINGTON, DC (June 2, 2008) At the request of the Federal Trade Commission, a U. S. District Court has ordered a temporary halt to the deceptive advertising claims used to promote prepaid phone cards marketed by Alternatel, Inc.; G.F.G. Enterprises, LLC, also d/b/a Mystic Prepaid; Voice Prepaid, Inc.; Voice Distributors, Inc.; Telecom Express, Inc.; and their principals, pending trial. The agency alleges the marketers misrepresent the number of calling minutes consumers will get on their cards and fail to adequately disclose fees that will reduce the value of the cards.

The defendants are part of an industry that sells approximately $4 billion worth of prepaid calling cards a year, many of which are sold to immigrants who depend on the cards to call friends and family in other countries.

According to the FTC, the defendants market their prepaid calling cards through small retailers and over the Internet. The defendants’ cards, which sell for between $2 and $10, are marketed under a wide variety of names, including “Aló Mamá,” “Coffee Time,” “Rey de Florida,” “Tree Monkey,” and “Voz do Brasil.” The defendants advertise their cards through posters displayed in the stores where they are sold as well as in foreign language ads on the radio, television and in newspapers.

The FTC alleges that consumers don’t receive the number of minutes advertised. For example, while a poster advertised that a calling card would deliver 360 minutes to Panama, the card delivered only 23 minutes of calling time. In fact, in 87 tests of the defendants’ cards, the cards delivered an average of only 50 percent of the advertised minutes.

In addition, the FTC alleges the cards carry hidden fees that are disclosed in tiny font and in vague terms that are mostly incomprehensible in any language.

Copies of the complaint are available at http://www.ftc.gov.

Source: Bureau of Consumer Protection