Pre-paid phone cards give poor value, break Alberta law
Long-distance cards carry fees, charges and conditions that reduce advertised value
Pre-paid long-distance phone cards that deliver only a fraction of the calling time they promise are still being sold in Edmonton-area stores.
A sample of cards bought by CBC News had extra fees, charges and conditions that reduced their advertised value, in violation of Alberta law.
The cards, different from those from major phone companies, are sold in convenience stores and are especially popular with recent immigrants.
"When I first moved here I had no internet, and was totally dependent on my calling cards," said Poushali Mitra, Program Coordinator at Edmonton Immigrant Services Association.
"I work with newcomers from all over the world. They use cards a lot. For $5 sometimes they promise you 50 or 100 minutes. But the next time you try and dial a number, you just don’t know how 40 minutes got lost."
Yolande Lawson-Body at Edmonton’s Mennonite Centre for Newcomers says clients frequently complain that phone cards don’t deliver what they promise, but they buy them because they’re inexpensive.
A card that costs $5, or even $2.50, ensures the user keeps their calls short and avoids high long-distance charges.
"The product is not good," Lawson-Body said. "If it works, it works. If not …yeah, it’s a gamble. You don’t complain, that's what happens with many people, (they say) ‘It's only $2.50.’"
Extra charges cut value of cards
Go Public Edmonton watched as Lawson-Body tried calling her sister in West Africa using two phone cards.
Phone cards, and gift cards are governed by the Alberta Fair Trading Act.
The Act prohibits cards from having expiry dates or extra charges.
Go to Service Alberta for information on how to make a complaint.
The first card, called "Good Call", didn’t work at all. Her second card, called "Jumbo Africa", completed her call after about a sixty-second delay.
A recording told Lawson-Body she had twelve minutes of calling time, but six minutes later she got a one-minute warning.
At seven minutes, the call was cut. For those seven minutes, Lawson-Body fought a distracting echo and crackly connection.
Both Lawson-Body’s cards were from the same company, Group of Gold Line.
What’s not disclosed on the cards, but is in the fine print on the company’s website, is a list of extra charges that cuts the value of the cards by almost half.
The company also imposes an expiry date on the cards — 30 days after first use.
Expiry dates and extra fees forbidden by law
All of these conditions violate Alberta’s Fair Trading Act.
Penalties under the act include a maximum $100,000 fine or three times the amount profited from the offence — whichever is greater — and up to two years in jail.
"Newcomers can often be targets of a lot of unscrupulous business practices," said Manmeet Bhullar, minister for Service Alberta.
"I myself will make sure that we proactively pursue these issues with these companies."
There has been confusion about whether prepaid long-distance phone cards are governed by Alberta’s Fair Trading Act.
Initially, they were specifically exempt because the provincial government believed telecommunications was a federal responsibility.
According to Mike Berezowsky, spokesman for Service Alberta, a subsequent legal opinion convinced the province to include phone cards in the legislation last year.
However, until contacted by Go Public Edmonton, Service Alberta’s website still said the phone cards were exempt.
That information has since been corrected, though Group of Gold Line Vice-President of Operations, Shawn Reyhani, believes the law still has to be tested. "We will right away modify the cards and give refunds" (if the cards are found to violate Alberta law), he said.
Bhullar says customers who feel they’ve been ripped-off should not be dismissive of the low cost of the cards, and he encourages people to complain to Service Alberta if they believe a phone card didn’t deliver what it promised.
"Regardless of the dollar amount, we're ready, able and willing to stand up for Albertans."
Complaints noted for years
Complaints about the cards have been around for years. In 2008, the federal Competition Bureau warned providers of prepaid phone cards to be honest about their actual rate-per-minute and to stop using fine print to hide extra charges.
In 2009, the bureau ordered Ontario-based Phonetime Inc. to offer refunds to consumers who bought some of its phone cards, and pay a $300,000 fine.
However, federal interest in regulating phone cards has diminished since. The Competition Bureau has not announced any rulings since 2009, and bureau spokesman Bryan Parker would not say whether it was conducting any new investigations.
In 2011, Service Alberta ordered a refund on a "Yak" pre-paid card that expired before the balance was use. And Alberta is currently investigating cards sold under the "Vox" brand name for having extra fees that aren’t allowed under the Fair Trading Act.
Three years ago, a study by the Consumers Council of Canada on the prepaid phone card industry found per-minute rates were higher than advertised on most cards.
Two-thirds of the cards it sampled contained extra fees and charges not mentioned on the card itself.
However, Ken Whitehurst, the council’s executive director, said the report also concluded that the industry was small and in decline.
"A problem that might go away on its own may not receive much attention (from the federal government)," he said.