FCC Fines 6 Companies That Sold Calling Cards $30 Million Total for Ad Claims; O'Rielly, Pai Dissent
Six companies will pay a combined $30 million in FCC fines for what the agency said was deceptive marketing of prepaid calling cards, though dissenting Commissioners Michael O'Rielly and Ajit Pai said it's the agency that's stretching or breaking the…
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law. The companies targeted immigrant consumers with advertising saying their calling cards cost just dollars but allowed hundreds or thousands of minutes in international calls, but then the companies all assessed numerous fees and surcharges that weren't clearly disclosed, the FCC said Wednesday. “Consumers should not have to comb through small print and contradictory disclosures to learn that the bold promises made in advertisements are false and misleading,” Enforcement Bureau Chief Travis LeBlanc said in a statement. Each paying $5 million in fines are Locus Telecommunications, Lycatel, NobelTel, Simple Network, STi Telecom and Touch-Tel USA. Pai said the six "used blatantly misleading and deceptive marketing," but that the agency's investigation didn't get all the information needed to justify a finding of multiple violations of Section 201(b) by each company -- those multiple violations instead of a single continuing violation being the difference between $5 million in fines versus a liability cap of $1.575 million. The forfeiture number also seemingly "was plucked out of thin air rather than determined through the use of a rational methodology," Pai said in his dissent, saying the notices of apparent liability and the forfeiture orders in some of the six cases lack any evidence the cards were sold within the one-year statute of limitations. O'Rielly, meanwhile, said the fines are part of a further expansion of the reach of Section 201(b) into marketing, and the agency never received any complaints about the six companies. "Some may be tempted to dismiss these actions as merely closing out the enforcement backlog on an industry that has been on the decline for years, with no effect on other types of companies," O'Rielly said his separate dissent. "Indeed, it is not clear that all of these companies remain in business today. Since this isn’t about getting the money, which may never happen, then it must be about setting the principle. Once this bad 'precedent' is set, it will undoubtedly be used against other types of providers in the future."