LAW OFFICES OF THOMAS K. CROWE, P.C.
LEGAL ALERT
Clients and Interested Parties:
On
March 8, 2007 IDT filed a lawsuit in a
federal district court against twelve
companies involved in providing prepaid
calling card services and their officers
and directors, alleging a “massive and
systematic scheme” to mislead consumers
under the Lanham Act’s prohibition of
deceptive trade practices and other state
false advertising laws. IDT is claiming
the defendants promised more minutes than
they delivered to consumers, unlawfully
drawing customers away from
IDT’s products and decreasing
IDT’s profits. This suit comes less than
two months after a court granted
preliminary approval to an unprecedented
class action settlement in which IDT will
refund over twenty million dollars to
IDT customers for its own insufficient rate disclosures. For other prepaid
providers, this suit serves as a warning
that the consequences for inaccurate or
insufficient claims made in advertising
can originate not only from customers and
regulators, but also competing prepaid
providers.
According to
IDT’s complaint, defendants deliver fewer minutes than
promised in their advertising campaigns.
The named defendants are as follows: CVT
Prepaid Solutions, Inc.; Dollar Phone
Services, Inc.; Dollar Phone Enterprises,
Inc.; Dollar Phone Corp.; Dollar Phone
Access Inc.; Epana networks, Inc.; Locus
Telecommunications, Inc.;
STI Phone Card, Inc.; Telco Group, Inc.;
VoIP Enterprises, Inc.; Find & Focus
Abilities, Ink.; and Total Call
International, Inc.
IDT asserts that these providers overstate the amount of minutes
left on the card in advertisements and on
an automated voice prompt at the beginning
of each call. This voice prompt is an
important source of information to
consumers and, according to
IDT, is a major factor when consumers decide which
calling card product to purchase.
IDT claims to have tested competitor’s cards by making a
single call that would use up all the
balance of the product. IDT compared the
voice prompt and minutes advertised with
the actual call time of the single call
and found that there was substantially
less time on the card than the
advertisements or voice prompt indicated.
The results of this test show that actual
talk time ranged from 55% to 70% of the
talk to time advertised, from defendant
CVT’s cards and STI’s cards respectively.
The average talk time on cards from all
defendants only gave consumers 60% of the
talk time promised. IDT, on the other
hand, claims to fully provide the
potential minutes advertised.
IDT is asking the court for a preliminary
and permanent injunction preventing the
defendants and their officers, employees,
attorneys, and those in privity with
defendants from advertising calling card
products with false or misleading
materials, voice prompts, and other
methods of promotion. In addition, IDT
has requested the court to order a recall
of all misleading advertising materials
and to require defendants to provide
notice to all distributors of their
products of the false advertisements.
IDT also is seeking to recover three times their lost
profits and exemplary damages.
Please contact us if you have any questions.
Thomas K. Crowe, Principal "firm@tkcrowe.com"
Law Offices of Thomas K. Crowe, P.C.
1250 24th Street, N.W.
Suite 300
Washington, D.C. 20037
(202)
263-3640 (voice)
(202) 263-3641 (fax)
www.tkcrowe.com
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