August 17, 2007

Commentary:

1-800-Calling-Card-Scam

By Gus West

The immigration debate has aroused fierce passion in all corners of the political arena.

But with the conversation focused on undocumented workers, border enforcement, and assimilation, it’s easy to lose sight of an issue that’s far more relevant to America’s most-recent residents — that immigrant populations are an easy mark for scam artists.

We’ve all heard of the Mexican laborers who turn their life savings over to hustlers, such as unscrupulous immigration attorneys, only to have everything disappear without a trace. But a less well-known scam involves something far simpler — fraudulent international phone cards.

And regardless of whether the victims are descendants of Native Americans or today’s newest arrivals, we should all agree that consumer fraud is wrong and that our leaders ought to prosecute it vigorously.

Unfortunately, that’s not currently happening.

Staying in touch with friends and family from home is obviously a priority of new immigrants to the United States. And because so many of these new arrivals start at the bottom of the economic ladder, prepaid phone cards have served as a cost-effective option for those calling abroad.

Indeed, a recent study by former Undersec-retary of Commerce Robert Shapiro found that an international call made with a prepaid card, on average, costs anywhere from 18 to 64 percent less than a call made using a traditional landline or wireless phone. For families needing to make every penny count, this can mean savings of up to $44 each month.

Telecom companies have also enjoyed the boom in prepaid card sales, as the upfront purchase removes the risk of an unpaid phone bill. And as prepaid cards have grown in popularity, the volume of international calls has risen dramatically — jumping from 200 million calls in 1980 to 11 billion in 2004.

But as the number of international calls via prepaid cards has escalated, so too have the number of unsavory businesses looking to con new immigrants. And because so many immigrants arrive without well-developed English skills and without any knowledge of the U.S. legal system, they’re easy targets.

The typical con, unsurprisingly, is to shortchange consumers on minutes — advertising one amount of time, but providing far less than that.

Often, consumers don’t even notice that they have been ripped-off, as the voice prompts from the company issuing the prepaid card are in line with what’s been advertised. After all, unless you’re looking at a clock, it’s hard to tell the difference between 25 and 30 minutes.

Because this crime is rarely prosecuted and extremely easy to perpetrate, it has become shockingly common.

A recent study by an independent research firm revealed that four major prepaid calling card companies cut the minutes advertised by up to one-half. Across all four companies, the average number of minutes available was actually just 60 percent of the amount advertised.

These figures correspond with research we’ve conducted at my organization, the Hispanic Institute. And we’ve also had these numbers confirmed by an outside auditor.

These cards aren’t simply defective products. Certain companies are knowingly defrauding some of America’s most vulnerable residents. Some companies even use mafia-style tactics, bribing storekeepers in immigrant-dense neighborhoods to sell illegitimate phone cards in exchange for a percentage of the proceeds.

We’re not talking about small change, either. Experts estimate that fraudulent prepaid phone cards swindle Hispanics out of close to a million dollars each day. And because the folks who use these cards often lack the resources and the knowledge to fight back against the scheme, it continues unabated.

Thus far, only a small number of congressmen and state attorneys general have expressed interest in this growing scheme. It’s time for more lawmakers to get on board, as our new arrivals deserve better.

Until a comprehensive anti-fraud campaign is in place, unscrupulous companies will continue to have their way with prepaid phone card consumers, and new immigrants will continue losing their hard-earned money.

The immigration debate will surely continue to evoke intense passion on both sides of the political aisle. This is one issue that should unite all of us.

Gus West is president of the Hispanic Institute in Washington, DC. 

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