|Clients and Interested Parties:
In a recent Notice of Apparent Liability for Forfeiture (“NAL”), the FCC proposed a $5 million forfeiture against NobelTel, LLC (“NobelTel”), a prepaid calling card provider, for deceptive advertising practices. The NAL continues recent actions taken by the FCC against prepaid calling card providers, which includes five similar NALs with forfeitures totaling $25 million. The FCC also reissued a May 2012 Enforcement Advisory warning carriers that the FCC is committed to pursuing companies that continue to engage in deceptive advertising.
As with the previous NALs, the FCC found that NobelTel used deceptive practices to lead customers to believe that its calling cards could make hundreds of minutes of calls for only a few dollars, while the actual number of minutes available on the cards were reduced drastically due to various surcharges and fees. One of NobelTel’s calling cards was advertised to offer 400 minutes of calling to Mexico but the FCC found that after only one 10 minute call the total value of the card was depleted. In fact, the 400 minutes could not be fully used unless one 400 minute call was placed.
Though the calling card did include a disclaimer, the FCC found fault with the language used by NobelTel. The FCC has established that disclaimer language needs to be “clear and unambiguous” and the customer needs to be able to calculate the cost of any call. The FCC took issue with the disclaimer’s listing of fees which “may apply” and indicating that the terms and conditions “may change”. The FCC determined that this ambiguous disclaimer language made it impossible for a customer to calculate the cost of any call.
The FCC also found problems with the placement of the disclaimer and determined that it was not “clear and conspicuous” to the customer. While the posters advertising the calling cards prominently placed the number of minutes available in large text, the disclaimers were placed at the bottom of the posters in smaller text which could easily be overlooked. Furthermore, the disclaimers on the cards themselves used extremely small font and were placed on the “hang tag”, which could easily be torn off and discarded by customers. The FCC stated that disclaimers that are in fine print and on materials that a reasonable customer would not read are “ineffective to ensure that consumers have an accurate and informed understanding of an advertising claim.”
It is clear that the FCC will continue to take enforcement action against deceptive advertising practices of prepaid calling card providers. If you have any questions regarding the FCC’s actions, or if you would like assistance in reviewing your prepaid marketing materials for compliance purposes, please do not hesitate to contact us.
For more information regarding the May 2012 FCC Enforcement Advisory, see our blog post.
To read more about similar NALs, see our previous Legal Alert.
Thomas K. Crowe, Partner
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