https://www.channelfutures.com/wp-content/themes/channelfutures_child/assets/images/logo/footer-new-logo.png
  • Home
  • Technologies
    • Back
    • SDN/SD-WAN
    • Cloud
    • RMM/PSA
    • Security
    • Telephony/UC/Collaboration
    • Cable
    • Mobility & Wireless
    • Fiber/Ethernet
    • Data Centers
    • Backup & Disaster Recovery
    • IoT
    • Desktop
    • Artificial Intelligence
    • Analytics
  • Strategy
    • Back
    • Mergers and Acquisitions
    • Channel Research
    • Business Models
    • Distribution
    • Technology Solutions Brokerages
    • Sales & Marketing
    • Best Practices
    • Vertical Markets
    • Regulation & Compliance
  • MSP 501
    • Back
    • Complete 2023 MSP 501 Rankings
    • 2023 MSP 501 50-1
    • 2023 MSP 501 100-51
    • 2023 MSP 501 150-101
    • 2023 MSP 501 200-151
    • 2023 MSP 501 250-201
    • 2023 MSP 501 300-251
    • 2023 MSP 501 350-301
    • 2023 MSP 501 400-351
    • 2023 MSP 501 450-401
    • 2023 MSP 501 501-451
    • NextGen 101 Rankings
  • Intelligence
    • Back
    • Galleries
    • Podcasts
    • From the Industry
    • Reports/Digital Issues
    • Webinars
    • White Papers
  • Channel Futures TV
  • EMEA
  • Channel Chatter
    • Back
    • People on the Move
    • New/Changing Channel Programs
    • New Products & Services
    • Industry Honors
  • Resources
    • Back
    • Channel Futures 20: Top Tech Providers
    • Advisory Boards
    • Industry Organizations
    • Our Sponsors
    • Advertise
    • 2023 Editorial Calendar
  • Awards
    • Back
    • 2023 MSP 501
    • 2023 NextGen 101
    • Channel Influencers
    • Circle of Excellence
    • DE&I 101
    • Technology Advisor 101 (TA 101)
    • Channel Leaders Lists
  • Events
    • Back
    • 2024 CP Expo Call for Speakers
    • Channel Futures Leadership Summit
    • MSP Summit
    • CP Conference & Expo
    • Channel Partners Europe
    • Channel Partners Event Coverage
    • Webinars
    • Industry Events
  • About Us
  • DE&I
Channel Futures
  • NEWSLETTER
  • Home
  • Technologies
    • Back
    • SDN/SD-WAN
    • Cloud
    • RMM/PSA
    • Security
    • Telephony/UC/Collaboration
    • Cable
    • Mobility & Wireless
    • Fiber/Ethernet
    • Data Centers
    • Backup & Disaster Recovery
    • IoT
    • Desktop
    • Artificial Intelligence
    • Analytics
  • Strategy
    • Back
    • Mergers and Acquisitions
    • Channel Research
    • Business Models
    • Distribution
    • Technology Solutions Brokerages
    • Sales & Marketing
    • Best Practices
    • Vertical Markets
    • Regulation & Compliance
  • MSP 501
    • Back
    • Complete 2023 MSP 501 Rankings
    • 2023 MSP 501 50-1
    • 2023 MSP 501 100-51
    • 2023 MSP 501 150-101
    • 2023 MSP 501 200-151
    • 2023 MSP 501 250-201
    • 2023 MSP 501 300-251
    • 2023 MSP 501 350-301
    • 2023 MSP 501 400-351
    • 2023 MSP 501 450-401
    • 2023 MSP 501 501-451
    • NextGen 101 Rankings
  • Intelligence
    • Back
    • Galleries
    • Podcasts
    • From the Industry
    • Reports/Digital Issues
    • Webinars
    • White Papers
  • Channel Futures TV
  • EMEA
  • Channel Chatter
    • Back
    • People on the Move
    • New/Changing Channel Programs
    • New Products & Services
    • Industry Honors
  • Resources
    • Back
    • Channel Futures 20: Top Tech Providers
    • Advisory Boards
    • Industry Organizations
    • Our Sponsors
    • Advertise
    • 2023 Editorial Calendar
  • Awards
    • Back
    • 2023 MSP 501
    • 2023 NextGen 101
    • Channel Influencers
    • Circle of Excellence
    • DE&I 101
    • Technology Advisor 101 (TA 101)
    • Channel Leaders Lists
  • Events
    • Back
    • 2024 CP Expo Call for Speakers
    • Channel Futures Leadership Summit
    • MSP Summit
    • CP Conference & Expo
    • Channel Partners Europe
    • Channel Partners Event Coverage
    • Webinars
    • Industry Events
  • About Us
  • DE&I
    • Newsletter
  • REGISTER
  • MSPs
  • VARs / SIs
  • Agents
  • Cloud Service Providers
  • Channel Partners Events
 Channel Futures

Telephony/UC/Collaboration


Consumer Disclosure: Next Step for Phone CardMarketers

  • Written by Channel
  • January 31, 2000

Posted: 03/2000

Soap Box

Consumer Disclosure: Next Step for Phone Card
Marketers

By Howard Segermark

Consulting firm ATLANTIC-ACM (www.atlantic-acm.com)
predicts that in 2000, approximately $5 billion worth of phone cards will be sold in the
United States alone. That’s practically one-half billion cards. The industry is fairly
crowded. And, although there have been numerous consolidations, many companies still are
getting into the business because of the ease of doing so. Thus, profit margins are razor
thin and competition is intense.

Much like the highly contested home business and long-distance postpaid markets, phone
card issuers are trying to innovate by offering to the consumer alternative ways of buying
their service. For several years, we have seen cards offering low per-minute rates in
exchange for a periodic or per-call surcharge. More recently, the per-minute rates have
plunged while the surcharges have multiplied.

Therein lies the rub. When does a multiplicity of surcharges cease to be innovative
packaging and begin to be a deceptive trade practice?

One response to that question is this: Don’t worry about cards that are confusing.
Worry about cards that are not providing service. There are still a number of those
around.

Factually, this is true: There are phone card companies that no longer provide service,
in turn, hurting both creditors and consumers. Nevertheless, at least two state attorneys
general–in New Mexico and Colorado–have opened investigations into deceptive phone
cards. The Federal Trade Commission (FTC, www.ftc.gov)
already has acted against one phone card company for an allegedly deceptive website.

The FTC and the FCC (www.fcc.gov) held in November a
joint meeting on "Advertising and Marketing of Dial-Around and Other Long Distance
Services to Consumers." The prepaid card industry association, International Telecard
Assoc-iation (ITA, www.telecard.org) attended.
Though prepaid phone cards were not specified on the agenda, the meeting quickly
evolved into a phone-card bashing session. (One representative of another majortelecom
trade association saw an opportunity to take attention away from his group by recommending
federal regulation of phone cards.)

New Mexico Assistant Attorney and Director of the Consumer Protection Division Robert
Reyna was quoted as saying (erroneously) that there were "no government
regulations" on phone cards. I have contacted him and offered the ITA’s cooperation
on this issue. In subsequent conversation with Reyna, it is clear he is concerned yet he
is looking to the industry to formulate its own guidelines on disclosure.

A Denver television station in November aired an exposi on a phone card issuer who
admitted the disclosure information on his cards was not true. The Colorado Deputy
Attorney General for Consumer Protection Garth Lucero promised to investigate such
practices. The ITA has been in touch with his office to assist and offer expertise in this
matter.

What are the bases for such accusations of deceptive practices?

According to the FTC’s "Policy Statement on Deception," there exists
deception "if there is a representation, omission or practice that is likely to
mislead the consumer acting reasonably in the circumstances, to the consumer’s
detriment."

Another relevant statement by the FTC regarding pricing is as follows: "Depending
on the circumstances, accurate information in the text may not remedy a false headline
because reasonable consumers may glance only at the headline. Written disclosures or fine
print may be insufficient to correct misleading representations."

The FTC concludes: "The Commission will find an act or practice deceptive if there
is a misrepresentation, omission, or other practice that misleads the consumer acting
reasonably in the circumstances, to the consumer’s detriment."

These excerpts constitute an invitation for a great deal of action and it is fair to
note that individual state deceptive practice laws follow closely the FTC’s rules. So,
what can the industry do? In response to this problem, ITA has delegated its Standards
Committee to develop new "Industry Guidelines" on consumer disclosure. This will
call for the first major revision in the association’s guidelines in more than four years.

The importance of this is the ITA Industry Guidelines have formed the basis for every
regulatory regime for phone cards that has been adopted over the past four years. Thus, it
is likely any new ITA guidelines concerning consumer disclosure will be seriously
considered by those who write the laws and draft the regulations on phone cards.

With that in mind, the ITA has asked for the input of the regulators prior to the
development of these new standards. In addition, groups, such as Consumer Action (www.consumer-action.org), have been asked also
for their contribution in this matter.

The scope of the survey administered by the ITA Standards Committee is very wide
reaching, covering such topics as whether the number of surcharges should be capped, what
information should be on the face of a vending machine and how a customer should be
informed of the rates for international calls.

In supporting revision of the industry guidelines, Gary Frank, ITA Chairman of the
Board and President/CEO of VoCall Communications (www.vocall.com),
has said, "It isn’t that the ITA wants to regulate how people market their product,
but it is far better for the ITA to develop fair and reasonable standards that we can all
live with."

The unfortunate hazard, of course, is unless the industry acts to propose reasonable
standards, harsh regulations might be imposed. Extreme rules might levy such a cost on the
legitimate phone card issuer, that he cannot profitably market cards in a given state.
Concomitantly, regulations may impose great costs on the legitimate issuer, thus allowing
the unscrupulous issuer to ignore the rules and undersell the legitimate cards.

Though there is great interest in other states, California may be the first to pursue
card issuers based on poor or misleading information. Laws that went into effect last year
will have teeth put into them by five new enforcement agents hired recently by the
California PUC (CPUC). The ITA took a group of industry leaders to San Francisco on Jan.
27 to meet with these regulators to discuss the issues facing the industry and exchange
ideas. The meeting was a productive one and ended with a commitment to maintain an open
and ongoing communication. The next six months or so will be important to watch, as cases
are brought to the fore and heat is put on particular companies that do not conform with
California’s rules.

Even though the California rules do not cover all the innovative ways of packaging
prepaid long-distance service, I believe other states will be watching the CPUC’s
enforcement actions very closely. This issue is of too great an importance not to grab the
attention of both regulators and enforcement officials nationwide. It is too important
also not to pique the interest of legitimate phone card issuers who are less and less
tolerant of scofflaw and/or rip-off phone card issuers.

There is also a major subissue when we talk about regulation and equal enforcement of
the laws, and this is taxes, including both the FCC tax and universal service fees. In
discussing this issue in public fora, I often have noted that the federal government did
not catch Al Capone on bootlegging charges. It got him instead on his failure to pay
taxes. Though the reasoning of revenuers is beyond mortal man, one may speculate that the
smoke generated from a phone card company being fined by a regulatory agency might find
its way to the nostrils of a tax agent. In fact, in hearings before the Senate Finance
Committee last year, IRS audit agents testified they were more likely to audit a company
when it was in the news. Just one more reason to walk the straight and narrow.

Howard Segermark is the executive director of the International Telecard Association
(ITA), a Washington-based trade group. He can be reached at +1 800 958 7824. The ITA
Standards Committee Survey may be accessed on the association’s website at www.telecard.org.


ROUNDTABLE

On local exchange competition …"I just want to say to all the
competitors, ‘Thank you for not leaving us to the mercy of the local phone companies.’ I
for one will advocate competition."

–Representative Thomas Bliley Jr., R-Va.

"In almost every sector, new industries have sprouted, and competition is driving
down rates, spurring innovations, bringing consumers more choices, better services. If
anyone tells you that this [1996 Telecom] act is not working, I hope you will set them
straight."

–William E. Kennard, chairman, FCC

"To me, competition means free and open markets. For instance, free and open
access to the facilities we [the competitors] need to be able to offer our services. But
transitioning from a monopolistic to a competitive marketplace is difficult in many
aspects. However, we can’t be premature about it, we can’t let down our guard, and we have
to remember that it just takes a while."

–Randall B. Lowe, executive vice president
and chief legal officer, Prism Communication Services Inc.

Tags: Agents Telephony/UC/Collaboration

Most Recent


  • Watching reality TV
    The Channel on Reality TV: Tech Advisor Shares Experience on Startup Show
    Going on a show for entrepreneurs showed how the technology advisor channel is one of the business world's "biggest secrets."
  • Stolen Avaya licenses lead to guilty pleas
    How a Fake Channel Partner 'Reaped Millions' in Stolen Avaya Licenses
    An Avaya employee generated licenses without authorization from the company and sold them on the cheap to a fake reseller.
  • LLMs among new products
    New Products, Services for the Channel: Contact Center LLMs, Dell, Telarus, More
    The contact center providers are working to keep up with each other and differentiate with domain-specific large language models.
  • John DeLozier new job at ConvergeOne
    John DeLozier on New Job at ConvergeOne, Post-Exit from ScanSource-Intelisys
    Find out what DeLozier said when we asked him about his exit from ScanSource/Intelisys.

Leave a comment Cancel reply

-or-

Log in with your Channel Futures account

Alternatively, post a comment by completing the form below:

Your email address will not be published. Required fields are marked *

Related Content

  • Video conferencing from home
    PGi Launches New Brand for Enhancing Virtual Meeting Experiences
  • Microsoft Teams app
    Microsoft Primes Partners to Build Next Wave of Teams Collaborative Apps
  • Business growth chart
    8x8 Signs Sandler Partners as Partner Earnings Jump 38%
  • Growth funding
    Successful Bridgepointe Partners Agree to Upstack Acquisition

Upcoming Events

View all

Channel Futures Leadership Summit

October 30, 2023 - November 2, 2023

Channel Partners Conference & Expo

March 11, 2024 - March 14, 2024

Channel Futures Leadership Summit 2024

September 17, 2024 - September 19, 2024

Galleries

View all

Broadcom-VMware Hits Snag in China as IT Incurs Too-High Cloud Costs

September 22, 2023

Cisco’s Splunk Acquisition ‘True Bombshell Move,’ Will Have Massive Impact on Cybersecurity

September 21, 2023

Cisco SMB Business Gets Updated Sales Coverage Model, New Investments

September 21, 2023

Industry Perspectives

View all

Why Conversational AI Matters for Your Customers and How It Can Boost Your Revenue

September 15, 2023

The 5 Ds that Lead to Unplanned Business Sales

September 13, 2023

Hot Generative AI Market Must ‘Cool Down’

August 28, 2023

Webinars

View all

MSP 501: Leadership in Cybersecurity

October 19, 2023

DE&I: Find the Balance that Works for You

September 7, 2023

Above and Beyond with the NextGen 101ers

August 30, 2023

White Papers

View all

6 UCaaS Reseller Challenges and How Real World Businesses Solved Them

February 1, 2023

Frost Radar: North American UCaaS Market, 2022

February 1, 2023

The Complete Guide to White-Label UCaaS for Reseller Success

February 1, 2023

Channel Futures TV

View all

Coffee with Craig and James Episode 129: ZLH Enterprises

Coffee with Craig and James Episode 128: Channel Partner Strategies Intelligence Service

August 25, 2023

Coffee with Craig and James Episode 127: Expereo, Movie Night Returns

August 18, 2023

Coffee with Craig and James Episode 126: ARG

July 28, 2023

MSP 501

The industry's largest and most comprehensive partner awards program.

Newsletters and Updates

Sign up for The Channel Report, Channel Futures Update, MSP 501 Newsletter and more.

Live Channel Events

Get the latest information on the next industry-leading Channel Partners event.

Galleries

Educational slide shows and images from live events.

Media Kit And Advertising

Want to reach our audience? Access our media kit.

DISCOVER MORE FROM INFORMA TECH

  • Channel Partners Events
  • Telecoms.com
  • MSP 501
  • Black Hat
  • IoT World Today
  • Omdia

WORKING WITH US

  • Contact
  • About Us
  • Advertise
  • Newsletter

FOLLOW Channel Futures ON SOCIAL

  • Privacy
  • CCPA: “Do Not Sell My Data”
  • Cookie Policy
  • Terms
Copyright © 2023 Informa PLC. Informa PLC is registered in England and Wales with company number 8860726 whose registered and Head office is 5 Howick Place, London, SW1P 1WG.
This website uses cookies, including third party ones, to allow for analysis of how people use our website in order to improve your experience and our services. By continuing to use our website, you agree to the use of such cookies. Click here for more information on our Cookie Policy and Privacy Policy.
X