FTC Seeks Injunction Against Diamond Phone Card, Inc. for Calling Card Fraud

On July 29th, the Federal Trade Commission (FTC) filed a permanent injunction against Diamond Phone Card, Inc. of Elmhurst, NY for calling card fraud. The complaint alleges that Diamond sold cards that delivered dramatically fewer minutes than were advertised.

The owner of the company and a key employee were also cited individually. The case was filed in the US District Court in New York.

Diamond Phone Card sells prepaid calling cards through retail outlets. It markets primarily to recent immigrants to the United States.

The FTC charged that Diamond Phone Card "advertisements made bold claims about the number of minutes the cards would provide for calls to a wide range of international locations, including the Dominican Republic, El Salvador, Mexico, India, Pakistan, and Guatemala. But the FTC charges that consumers didn’t receive the number of minutes advertised. For example, a calling card claiming to deliver 400 calling minutes to Mexico provided only 106 minutes of calling time, and one claiming to deliver 50 minutes of calling time to Honduras actually delivered only 20 minutes".

The complaint also states that the company did not properly disclose all applicable calling card fees, including maintenance and other fees. For example, one card that costs between $2 and $5 came with a 79¢ that was disclosed in barely legible print at the bottom of the card.

This action continues a recent crackdown on calling card fraud by the FTC. In June 2009, the FTC settled a major case against Clifton Telecard Alliance. And in February 2009, the FTC settled cases against Alternatel, Voice Prepaid, and Mystic Prepaid.

As part of this, the FTC has also established a joint federal-state task force to go after deceptive advertising and marketing practices in the prepaid calling industry. These efforts have contributed to state actions in New York, Florida, Texas, and California.

The FTC was assisted in its efforts against Diamond Phone Card by several organizations, including "El Salvador’s Defensoría del Consumidor, Colombia’s Superintendencia de Industria y Comercio, the Egypt Consumer Protection Authority, Mexico’s Procuraduría Federal del Consumidor (PROFECO), Panama’s Autoridad de Protección al Consumidor y Defensa de la Competencia (ACODECO), and Peru’s Instituto Nacional de Defensa de la Competencia y de la Protección de la Propiedad Intelectual (INDECOPI)."

Note: Diamond Phone Card, Inc. is not the same as the calling card named 'Diamond Phone Card' sold by a variety of calling card resellers.

Additional information:

FTC press release on Diamond Phone Card

Diamond Phone Card complaint filing

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