Watchdog warns users about phone cards

By ALEXIS GRANT


Phone card users have been advised to look out for hidden costs next time they buy a prepaid card.

"Consumers need to look at the cards very carefully," said Deborah Battell, the Commerce Commission's director of fair trading.

The commission has also issued a warning to prepaid phone card companies and distributors that misrepresent the price of their products.

"The industry must get itself sorted out and make sure that everyone is providing accurate information to consumers," Ms Battell said.

The commission sent letters to 22 companies that are at risk of violating the Fair Trading Act. Violations include not marking the card with an expiry date, writing special conditions in a language other than English, not clarifying that prices do not include GST and failing to disclose the minimum charge per call. The companies, which included Chi Tel, Compass Communication, E Pay and Telstra Clear, are expected to make changes immediately, Ms Battell said.

Cardcall NZ, maker of Kiwicall, Ratesaver and GoTalk, was also contacted. Telecom was not included.

Mathew Bolland, spokesman for Telstra Clear, maker of TalkPlus, Pacific Talk and ePhone cards, said the company was taking steps to address the commission's concerns.

But because the group sent the same letter to each of the 22 companies in violation and outlined a variety of inconsistencies within the industry, companies like Telstra are not sure how they have violated the law or what improvements to make.

"We're still trying to work through with the commission what it is they're concerned about," Mr Bolland said.

The prepaid phone card industry is small, but growing. One industry expert estimated it brings in about $55 million each year.

Dave Spicer, general manager of sales and marketing at Compass Communications, said that although his company was named in the commission's press release, the company had not received notification in the mail.

"We haven't gotten a copy of the letter, so we have no actions to take," Mr Spicer said. The company made changes recently to make sure there were no customer "fish hooks" in their products, he added.

David Russell, chief executive of the Consumers' Institute, said the commission's warning was clear.

"It's disingenuous for the companies to say they don't know where they're going wrong," Mr Russell said. "Any company that is in doubt need do nothing more than check out their promotions and advertising against the Commerce Commission's list."

Some prepaid phone card users said they had trouble calling overseas from Auckland.

"It says 45 minutes and the time ends before you expect it to," said Abel D'Souza.

His family often bought prepaid phone cards to call India, where he came from two years ago.

Mr D'Souza's experience is typical, says Deborah Battell.

"In some cases, it's actually hard for consumers to know what the problems are. They simply find that the value of their cards is being eaten up faster than they expected."

But many users said they were happy with the way prepaid phone cards worked.

"It's excellent," said Australian Shane Aldred, referring to the Kiwicall card he had just used in an Auckland pay phone.

"I had more [minutes] than I thought."

Auckland resident Lisa Higgins said one phone card she bought stopped working after she used it only once, and the customer service phone number listed was out of service.

But she says she likes the card she uses now, Chi-Tel, made by one of the companies named by the commission.

"I haven't had any problems."

Chi-Tel general manager Kevin Day said his company was looking at the commission's recommendations.

"We hope now that everyone plays by the rules," Mr Day said.

"It would be good for users; it would be good for everybody."