Hank Investigates: Taking Your Time

Carolyn's calls to Taiwan were surprisingly expensive.

Carolyn
"I feel ripped off."

Luis's calls to his daughter simply never connected.

Luis
"It’s unacceptable."

They're complaining because they were using pre-paid phone cards, a 4 billion-dollar industry experts fear is ripe for rip-offs.

Howard Segermark, International Prepaid Communications Assoc.
"Whenever a consumer buys something and they don’t get what they were promised, that’s wrong."

And though some cards are a low cost convenience. We found others where the calls are shockingly expensive, and some, where he cards don't work at all.

Howard Segermark
"It’s the bad guys that hurt the good guys."

One card, for instance, says 1.7 cents per minute--but we calculated the actual costs for a one-minute call. It’s 1.7 cents a minute plus a surcharge of 49 cents, plus a weekly charge of 25 cents so your real cost is about 75.7 cents for that minute!

Making the call from a pay phone costs 50 cents more, so the total for that one-minute is $1.25, almost 75 times higher than 1.7 cents! The only way to get the 265 minutes it promises is to make one 4 1/2-hour phone call and you can’t use a pay phone.

Over and over we found service fees and surcharges often not even disclosed on the cards! What's more the fine print often says, "the rates may change"! When Carolyn called her boyfriend on his cell phone the rates more than doubled!

Carolyn
"I was shocked. I was surprised. I was angry."

Another problem, companies could sell you more time than they actually have, that means you've paid for calls that will not go through! Luis paid ten bucks for this phone card to call Africa. He says it's never worked! We tried it again, and again, and again, the call did not connect!

Luis
"I'm being robbed of a service that I paid for."

And what happens when your $5 card is down to 25 cents or so, that’s not enough for a phone call!

Here's what: the phone company just keeps the money!

Hank Phillippi Ryan
"So can I get a refund?"

Check the cards' fine print. Most say: no refunds. That means: you paid for time you can't use and you get can't get your money back.

Hank
"But I paid for $5 of minutes, why can’t I get $5 of minutes?

This industry study reveals in retail cards, one of every 12 minutes goes unused! Insiders call that leftover time and money "breakage" - and they admit - phone companies count on taking your time.

Howard Segermark
"When a consumer does not use a phone card up, it’s totally rational that the phone card will lose its value."

So every time you toss out a phone card with an unusable balance, waste money on fees, or even stash a card to use later and forget about it: the phone companies say "thank you" and add your money right to their bottom line.

To get the most value for your card:

• Check for surcharges before you buy
• Make longer calls to avoid connection fees
• Use up your minutes quickly

Experts say those rechargeable cards are best, they let you add minutes, not lose them.

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