Calling card fraud is a serious issue that is costing consumers millions of dollars per year.

The two main calling card problems that consumers experience are:

• Receive far fewer minutes than advertised
• Hidden fees drain cards of value in mysterious ways

As a result of these problems, recent studies have shown that in some cases consumers receive no more than 50% - 60% of advertised minutes. A report by the Hispanic Institute gives some specific examples of some phonecards that deliver far fewer minutes than advertised (pdf).

As you might expect, these studies have also shown that actual per minute rates can be 80% - 100% higher than advertised per minute rates. This is due to all fees and surcharges that are added onto the base rate. Our own analysis suggests that some cards may see actual per minute rates of 200% or more higher than the advertised rate - though much depends on your calling habits and the specific fees involved.

Legal Action on Calling Card Fraud

Of course, these problems don't affect all cards, but they are severe enough that several federal and state agencies have brought successful lawsuits against calling card companies.

In particular, the Attorney General in Florida settled a calling card fraud suit this year involving a total of 11 calling card companies. The Federal Trade Commission (FTC) and the Attorney's General of New Jersey and Texas have also recently pursued calling card fraud cases.

In addition, the US Congress has become active in this area, considering two bills in recent years to regulate and control calling card marketing. As of this writing, the Congress is considering a bill called the Prepaid Calling Card Consumer Protection Act of 2008, S. 2998. No word yet on whether this will pass or not.