FCC Proposes $5 Million Fines Against Multiple Prepaid Card Providers

We noted in April 2010 that the FCC was investigating prepaid calling card provider disclosures. We suspected that action was likely when we saw four notices of apparent liability against unidentified companies appear on the FCC’s items on circulation list in late June. Yesterday, it became official: the FCC announced four separate Notices of Apparent Liability against prepaid calling card providers for insufficient disclosures to consumers of its prepaid calling card rates. in each case, the FCC proposes a fine of $5 million for unjust and unreasonable” practices in violation of Section 201(b) of the Communications Act.

The NALs follow a recent trend of large fines proposed against multiple carriers as a warning to the entire industry. Other prepaid card providers should examine their disclosures carefully to ensure that they clearly and conspicuously disclose all terms and conditions associated with the cards they sell.

As has become its recent practice, the FCC issued several documents relating to the prepaid card investigations. In addition to a press release announcing a total of $20 million in fines, the FCC’s Enforcement Bureau released an Enforcement Advisory on prepaid cards and a Tip Sheet” for consumers of prepaid cards.

In addition, the Commission released the text of its four NALs against Locus Telecommunications, Lyca Tel, LLC, STi Telecom, Inc. (formerly Epana Networks) and Touch-Tel USA, Inc. Each carrier may respond to the proposed fines within 30 days.