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IDT Calling Card Charges Probed

IDT • Long-distance • Calling cards --- • Card charges investigated

November 10, 2003

Prepaid Calling Cards • D.C. Sues AT&T for Unused Calling Card Balances • California Gets Judgment Against Calling Card Company • New Jersey Calls 'Time Out' On Prepaid Calling Cards • FTC Backs Crackdown on Pre-Paid Phone Card Abuses • Texas Sues Prepaid Calling Card Company • Illinois Targets Pre-Paid Calling Cards • IDT Calling Card Charges Probed • AT&T Faces $500 Million Phone Card Payment

New Jersey's Office of Consumer Protection is investigating allegations that IDT, the leading issuer of prepaid long-distance phone cards, misrepresented fees and calling rates. The Newark-based company also faces several consumer class action suits.

The allegations mirror those received by ConsumerAffairs.com in complaints from IDT customers.

"We haven't seen my husband in over 3 months and we live to hear from him on the weekends," said Heather, whose soldier husband was unable to call home from Iraq because of problems with his IDT calling card.

"I used an IDT $5.00 pre-paid phone card as following: it started with 30 minutes available; after two busy signals, the card had 9 minutes left and I spoke for 2 minutes before the time finished up," said Emilia of Jackson Heights, NY.

IDT logged more than $1 billion in sales of its prepaid long-distance phone cards for its last fiscal year, making it the industry leader in a field that includes names such as AT&T and MCI. It sells the cards under no fewer than 250 separate brand names.

The consumer lawsuits have been folded into a single federal case, charging that IDT failed to adequately disclose a bi-weekly service charge of 69 cents for some cards or "connection fees" that ranged from 50 cents to $2 a call, among other things. Those fees made per-minute calls much higher than advertised, claim the suits, which are seeking class-action status.

IDT denies it misled customers, and has said it is serving markets ignored by other phone carriers. Many of its customers are recent immigrants from Latin America, who make frequent calls home.

Unlike most telecommunications services, calling cards are subject to very few regulations. IDT chairman Howard Jonas would like to change that.

"Without rules, we are always open to nonsense that the print wasn't big enough to say how much it cost, or the print was too big," Jonas told the Newark Star-Ledger. "What we would like is some regulatory body to set some standards for the industry."

Jonas said IDT has fruitlessly lobbied state and federal legislators for clearer regulatory guidelines.

Attorneys for the plaintiffs say the rules are as clear for calling cards as for any other product: all fees and charges must be clearly disclosed upfront.

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