Commission launches phone calling card probe

A shop window in downtown Auckland with advertisements for international pre-paid calling cards. Photo / Christopher Adams.

The Commerce Commission has launched a probe into the pre-paid calling card market after repeated complaints that advertisements breach fair trading laws.

A spokeswoman said the commission was investigating whether "misleading representations" have been made about the costs of using some the calling cards.

The Commerce Commission would not say which companies were being investigated.

Calling cards are usually bought from convenience stores, and allow users to call overseas at much cheaper rates than those offered by their usual telecommunications provider.

Users scratch a panel on the back of the card, which reveals a code that gives access to a line that can be used for international calls.

Compass Communications, one of New Zealand's largest providers of calling cards, told nzherald.co.nz that it "welcomes" the Commission's investigation into the industry.

"Compass has been asked [by the Commerce Commission] to demonstrate how the length and cost of test calls are consistent with what our promotional material states the customer will receive," said general manager Dave Georgetti.

"In all cases Compass has been able to show full delivery of stated value to the customer."

Compass provides many of the more popular calling cards in the New Zealand market, including the Kia Ora, Talk'n'Save and Go Call cards.

Georgetti said the unfair business practices of other calling card providers should be stopped, citing such abuses as:

- Applying a large number of charges and conditions that make it hard for the customer to easily estimate the call cost, or work out if they are receiving the promised value.

- Claiming "no connection fee" and then charging a disconnection fee instead.

- Hiding relevant charging information in the fine print at the bottom of the window poster when it should be clearly displayed with the rates.

- Not including relevant charging information at the point of sale.

Georgetti said many calling card customers spoke English as a second language, and some providers were taking advantage of this, rather than making the charges as "clear and simple" as possible.

"Many users simply buy a card based on a poster's headline per minute rate, without reading the accompanying fine print," he said.

"Much of the actual cost has been hidden in non-rate charges in order to make the basic per minute rates look as attractive as possible."

He said consumers should take time to carefully read a card's terms and conditions, before purchasing it, and stick with brands they trust.

"Suppliers who are pushing the limits at the consumer's expense need to be named, shamed and fined," said Georgetti.

One disgruntled customer complained to nzherald.co.nz about the service she has received when using 'Choice Africa' calling cards, provided by Cardcall, an Australia-based company.

According to its website, Cardcall was established in Australia in 1996 and is the country's "market leader in prepaid calling cards with a national distribution of 30,000 retailers [Australia] wide".

Cardcall offers 12 different calling cards in New Zealand, with names such as Choice Asia, Kiwi Call and Choice Africa.

The customer began using Choice Africa calling cards six months ago.

When she first began buying the cards, $10 credit would buy 61 minutes of call time to her home country of Ethiopia.

However, over the last six months the amount of call time $10 credit bought had whittled down to 40 minutes, she said.

She said the connection with Choice Africa cards was often "very bad".

"The line is sometimes OK, but most of the time it's bad."

She added that it was not uncommon to lose $2 to $3 worth of credit repeatedly trying to get though to her family in the Ethiopian capital Addis Ababa.

"I probably lose $20 each month on wasted credit with these Choice Africa cards."

The fine print of the 'Oasis' calling card - also supplied by Cardcall - includes a $4.44 disconnection fee which applies to every call longer than 10 minutes.

Nzherald.co.nz made repeated attempts to contact Cardcall for comment. Callers to the Cardcall's 0800 customer enquiries number were not answered.

Toby Yuen, owner of the Civic Sueperette in central Auckland, said calling cards accounted for roughly 20 per cent of her business.

She said she avoided stocking cards from less-reputable providers, as the minutes they advertised were often misleading.

"They might say you can call India for 300 minutes, but when [the customer] actually calls they only get 100 minutes," she said.

She said some calling cards had no customer service number, so dissatisfied customers had no way of complaining about the service they received.

Yuen said she would refund her customers if they brought back a calling card they were unhappy with.

"The bad thing is that sometimes the suppliers won't take any responsibility for that," she said.