The Federal Trade Commission today asked a U.S. district court judge to halt to
the alleged illegal practices of CTA or the Clifton Telecard Alliance, a major
distributor of prepaid calling cards in the US.
The FTC charges that CTA misrepresents the number of calling minutes consumers
get, fails to disclose that consumers’ cards will be charged whether or not the
calls go through, and charges hidden fees. According to the FTC, CTA which is
headed by Mustafa Qattous, is a key player in the prepaid phone card industry
that sells approximately $4 billion worth of cards a year – primarily to
immigrants looking for a cheap and easy way to call friends and family in other
countries. In the last quarter of 2007 alone, CTA’s revenue from the sale of
cards exceeded $28 million, the FTC said. A recent study said the prepaid
calling card industry could rake in some $22 billion by 2012.
CTA sells cards in increments of $2 to $20 under various brand names, and has
cards for use in calling countries from Albania to Zimbabwe, the FTC said. They
also sell cards for domestic calling.The FTC charged that CTA provides posters
to the small retail outlets like gas stations, grocery stores and newstands that
sell its cards. The posters advertise the number of calling minutes and brag it
offers rates with “no connection fees.”
But consumers who use the calling cards don’t receive the number of minutes
advertised. For example, the FTC complaint says a card that advertised 40
minutes calling time to El Salvador cut off the call after only 27 minutes. A
card that advertised 30 minutes calling time to Egypt cut off the call in a
little over 10 minutes. In fact, the FTC purchased 46 CTA cards in retail stores
and tested by them. None of the cards delivered the calling minutes advertised
by posters displayed where the cards were purchased.
Indeed the Complaints.com Web site and others have numerous complaints about how
the firm has done business, the FTC complaint states.
Neither the advertising posters nor the calling cards disclose that if the calls
do not go through, the cards are charged fees anyway. The FTC has asked the
court to halt the deceptive practices pending trial, and to appoint a monitor to
oversee the business. The agency also will seek a court order to require the
defendants to give up any illgotten gains.
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