National Consumers League urges Congress not to allow credit bureaus’ credit scoring company to dominate the credit scoring system

May 13, 2022

Washington, D.C. –

The National Consumers League has sent a letter to the Chairs of the Senate Banking and House Financial Services Committees asking these leaders to conduct adequate oversight on the nation’s credit bureaus, TransUnion, Equifax, and Experian. “The three bureaus keep financial records and establish credit scores for hundreds of millions of Americans. For years, consumer organizations like ours have been raising questions about the behavior and actions of these entities, who in recent years have together created their own credit scoring company called VantageScore.”

The letter noted that “On April 12th of this year, the Consumer Finance Protection Board (CFPB) filed a lawsuit against credit bureau TransUnion and their long-time CEO for willfully violating the law and defrauding consumers, with CFPB’s director saying that ‘TransUnion is an out-of-control repeat offender that believes it is above the law.’  The letter also noted that “In September of 2017, the nation learned that another of the big three, Equifax, had been breached and the financial records of close to 150 million Americans had been compromised. “Investigations …found that Equifax had failed to protect the data that they had been entrusted with and a global settlement was reached.”  The letter goes on to say “… the three credit bureaus own a credit scoring company called VantageScore. Vantage Score is vigorously lobbying the FHFA to spend millions of dollars to change the credit scoring system for the GSEs in order to win market share.”

The letter urges these members of Congress to “ask tough questions and share your concerns directly with the FHFA, especially before that agency takes any action that could send millions of dollars into the pockets of VantageScore.”

Read the letter here.


About the National Consumers League (NCL) 

The National Consumers League, founded in 1899, is America’s pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit


National Consumers League Calls for Stronger Genetic Privacy Protections

April 7, 2022

Media contact: National Consumers League –  Katie Brown,, (202) 207-2832

Washington, D.C. – The National Consumers League (“NCL”) today called on policymakers in Congress and the Biden Administration as well as industry leaders to adopt the organization’s new “Genetic Privacy Rights,” as guideposts for future actions to protect consumers’ genetic data. The group called for legislation, executive actions, and industry practices that protect the “complete confidentiality” of genetic data. The organization further called for the adoption of an “ethical use” standard prohibiting the use of consumers genetic data for military, surveillance, and similar purposes. Finally, given the emerging misuse of genetic data to violate human rights, the group called for protections against Americans’ genetic data being shared with countries deemed “foreign adversaries” of the United States.

“Unlike a password or credit card number, consumers’ DNA cannot be changed even if it has been compromised,” said John Breyault, NCL’s Vice President for Public Policy, Telecommunications and Fraud. “While personal data of all types can be misused to harm consumers, the unique and inalterable nature of genetic data makes special privacy and security protections necessary. As access to genetic data becomes increasingly widespread in both private and governmental contexts, the threats of misuse have only grown.”

The potential for misuse of genetic data has been highlighted by the activities of foreign adversaries of the United States. For example, entities associated with the Chinese government have made it a priority to collect genetic data of American citizens to help build more effective surveillance technologies. The Russian government has also sought to collect genetic data to build “genetic passports” that experts believe could be used to build lists of individuals’ genetic traits and health risks.

“Clear rules of the road that give consumers’ genetic data the utmost legal protection is urgently needed,” said Breyault. “Consumers should be confident that when they share their genetic data with health care providers or private entities, that data will not be shared for purposes beyond which it was provided or with entities that are not committed to the ethical use of that data.”

The full list of NCL’s proposed genetic privacy rights is available here. A roadmap of potential legislative, executive, and industry actions is available here.


About the National Consumers League (NCL) 

The National Consumers League, founded in 1899, is America’s pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit

National Consumers League support for investigation of anti-competitive practices in the live event ticketing industry

Media contact: National Consumers League –  Katie Brown,, (202) 207-2832


April 1, 2022


The Honorable Jonathan Kanter

Assistant Attorney General

Antitrust Division

United States Department of Justice

950 Pennsylvania Avenue, NW

Washington, DC 20530-0001


RE: National Consumers League support for investigation of anti-competitive practices in the live event ticketing industry


Dear Assistant Attorney General Kanter,

On March 15, 2022, Senators Richard Blumenthal and Amy Klobuchar urged the Department of Justice (“the Department”) to investigate the state of competition in the live-event marketplace, including potential violations of Live Nation-Ticketmaster’s updated consent decree.[1] The National Consumers League, America’s oldest consumer advocacy organization, supports Senator Blumenthal’s and Senator Klobuchar’s request for the Department to take action on the issue of live entertainment marketplace competition.

As the Department is aware, just one company, Live Nation Entertainment (“LNE”), controls roughly 80% of the primary ticketing market following Live Nation’s vertical

integration with Ticketmaster.[2] In the Department of Justice’s own words, Ticketmaster benefits from “high barriers to other companies successfully, substantially, and profitably entering or attempting to expand in the market for primary ticketing services to major concert venues.”[3] There is no indication that the Live Nation-Ticketmaster merger (and further monopolistic actions since 2010) have reduced these barriers to entry.[4]

In fact, anticompetitive behavior in the live-event marketplace is so egregious that the Department was forced to obtain an updated consent decree with LNE in 2020.[5] Although the modified final judgement was a welcome act, consumers still suffer due to many of LNE’s business practices.[6] Since the announcement of the updated consent decree, Live Nation has continued to eliminate marketplace competitors, including an acquisition that received the Department’s approval.[7]

As a result of toxic market practices, concert attendees, sports fans, theater enjoyers, and other live-event goers must endure punishing hidden fees. In 2018, the Government Accountability Office found that on average, purchasers paid an additional 27% of the ticket’s original value in fees.[8] Recent media reports have found fees as high as 78% of the ticket’s starting price.[9] This is after consumers must contend with scalpers employing illegal ticket-buying “bot” software and other unscrupulous methods in order to even secure their tickets.[10]

The unfortunate state of the live entertainment marketplace warrants an investigation by the Department—with specific attention to LNE’s compliance with the updated consent decree. The harmful impacts of LNE’s near-monopoly are unacceptable. We urge the Department to conduct a thorough investigation of these practices and, if necessary, take action to ensure market health and consumer protection.


Sally Greenberg

Executive Director

National Consumers League


[1] United States Senator Richard Blumenthal. Blumenthal & Klobuchar Urge DOJ Action to Restore Competition in the Concert & Live Entertainment Market. (March 2022).

[2] United States Government Accountability Office. Event Ticket Sales: Market Characteristics and Consumer Protection Issues. (April 2018). Pg. 4.

[3] United States Department of Justice. Competitive Impact Statement, United States of America v. Live Nation Entertainment, Inc., No. 1:10-cv-00139 (D. D.C. Jan. 25, 2010).

[4] The Hollywood Reporter. Live Nation Accused of Shutting Out Venues That Don’t Use Ticketmaster. (January 2022).; Ticket News. Ticketmaster Resale Returns to Broker-Focused Conferences Despite Past Controversy. (July 2021).

[5] United States Department of Justice. Justice Department Will Move to Significantly Modify and Extend Consent Decree with Live Nation/Ticketmaster. (December 2019).

[6] Variety. John Oliver Blasts Ticketmaster in Scathing Broadside Against Ticket Prices, Fees, Secondary Market. (March 2022).

[7] Complete Music Update. Ticketmaster gets approval for deal to buy Rival. (April 2020).

[8] United States Government Accountability Office. Event Ticket Sales: Market Characteristics and Consumer Protection Issues. (April 2018).

[9] The Guardian. John Oliver rips Ticketmaster and live music costs: ‘One of the most hated companies on earth’ (March 2022).

[10] United States Federal Trade Commission. Cracking down on ticket bots that leave you out in the cold. (January 2021).,the%20tickets%20for%20higher%20prices


About the National Consumers League (NCL) 

The National Consumers League, founded in 1899, is America’s pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit

LifeSmarts announces partnership with Discover® Student Loans  

Media contact: National Consumers League – Katie Brown,, (202) 207-2832

During Financial Literacy Month, LifeSmarts teen consumer literacy program has introduced a new lesson focused on financing a college education and understanding student loans.

March 31, 2022

Washington, DC– The 28th National LifeSmarts Championship is on the horizon for the National Consumers League’s (NCL) youth consumer education program. Through LifeSmarts students learn about real-life consumer issues and compete to win prizes and scholarships at the National LifeSmarts Championship in April each year. Tomorrow, April 1, is the start of Financial Literacy Month. To commemorate this month, NCL is proud to announce a new lesson about financing a college education, made possible through financial support from Discover Student Loans.

On April 21, 39 teams from across the country will meet in Washington, DC, to compete in the 2022 National LifeSmarts Championship.  The Championship competition takes place over four days in which students will showcase their knowledge of personal finance topics as well as consumer rights, technology and workforce preparation, health and safety, and the environment.

Thanks to Discover Student Loans, LifeSmarts has created a new lesson on financial aid, with questions that will be featured in the National Championship. In the fall, the lessons and new competition focus will be fully integrated into the program for the new school year. Students and educators will see a concentration on personal finance topics at both the 2022 and 2023 National LifeSmarts Championships.

“We are so pleased to work with Discover Student Loans to help our students learn more about the important subject of paying for post-secondary education,” said National Program Director Lisa Hertzberg. “We know LifeSmarts gives students the skills they need to succeed as adults, and we see students applying what they learn immediately at home and in their communities. We are thrilled to be able to give special focus to the most crucial lessons in personal finance, and we look forward to rolling out new resources for educators and opportunities for student participants.”

Last year, students answered more than 3.5 million consumer questions about credit reports, nutrition, social media, and everything in between. More than 100,000 students will participate this year.

LifeSmarts is active in all states and the District of Columbia, where NCL is headquartered. “We are excited to have the opportunity to focus on personal finance for consumers at this age, when they are beginning to make decisions for themselves and influencing decisions made by their parents,” said Sally Greenberg, executive director of NCL. “Too often, traditional high school curriculum fails to teach students vital information to become successful adults, and LifeSmarts helps to close that gap.”

“It’s important that students and their families plan and save for college expenses, pursue free financial aid such as grants and scholarships, and understand the options for federal and private student loans,” said PK Parekh, senior vice president of Discover Student Loans. “We are very happy to work with LifeSmarts to help students learn through real-world lessons about personal finance, financial aid, and responsible borrowing.”


About LifeSmarts

LifeSmarts is a comprehensive consumer education program that is free to middle school and high school students and educators. The goal of the LifeSmarts program is to create consumer savvy young people who will be better equipped for adult life in today’s complex, global marketplace. Visit for more information. LifeSmarts: Learn it. Live it.

About the National Consumers League (NCL)

The National Consumers League, founded in 1899, is America’s pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit

FTC report shines light on continuing problem of ID theft – National Consumers League

In the world of fraud fighting, the release of the Federal Trade Commission’s Consumer Sentinel Data Book is something of a wonky holiday. Yesterday was no exception, with the agency publishing the annual report, which examines trends in the 2 million-plus complaints the FTC receives annually. The headline of the report was depressingly familiar: identity theft continued to be the biggest driver of complaints to the FTC for the 14th straight year.

This trend is one of the reasons NCL produced our State of Identity Theft in 2013 report last year, which examined the continuing threat of ID theft and why we are making the issue of data insecurity a top priority in 2014.

Looking deeper into the Sentinel data, some additional interesting trends and questions come to light, including:

  • Does youth correlate with risk of identity theft? The FTC noted that 20% of ID theft complaints came from consumers aged 20-29, who comprise only 13.8% of the population. There is also a steady reduction in ID theft complaint rates as consumers get older. For example, 8% of ID theft complaints come from consumers aged 70-plus, which is consistent with their overall 9% distribution in the population. An open question is whether identity theft risk decreases as consumers age or whether the correlation is due to an increased likelihood that younger consumers will report identity theft.
  • The telephone is scammers’ contact method of choice. While recent news has been dominated stories about high-tech data breaches, it appears that scammers are returning to a somewhat old-fashioned tool: the telephone. Last month’s Top Ten Scams report noted that telemarketing fraud was making a major comeback, with 36% of complaints mentioning the telephone as the method of contact. The FTC’s new data confirmed this, finding that 40% of complaints cited the telephone as the method of contact. The telephone is now the preferred method of contact by scammers, overtaking email for the first time since 2011. Congress is taking notice as well. In December, a bipartisan group of legislators introduced the Anti-Spoofing Act, which would crack down on scammers disguising their calls by altering Caller ID information.
  • Scammers shifting technique in “grandparent’s scams.” Con artists have long used the story of a loved one in distress to defraud consumers, particularly older adults. Also known as the imposter scam, this fraud starts with the fraudster calling a victim with an urgent appeal for funds to help a friend or family member in need. For example, the scammer might claim that a beloved grandson was in a car accident overseas and needs money to pay a hospital bill or to get bailed out of jail. More than 121,000 consumers reported an imposter scam to the FTC in 2013, an increase of more than 36,000 complaints since 2012. The scam is evolving as well. Whereas fraudsters used to impersonate a friend or family member, they are increasingly claiming to represent a business or government official.
  • Encouraging signs in the fight against lottery scams. For the second year in in a row, complaints about this type of fraud have decreased (down by almost more than 10,000 complaints since 2011). Thanks in part to consumer education campaigns like growing awareness of these scams seems to be having an impact.

More than 2.1 million complaints were filed with the FTC in 2013, with reported losses of more than $1.6 billion. Given that fraud is a chronically underreported crime, we should assume that many millions more consumers were harmed. As we prepare to mark National Consumer Protection Week, this new data should serve as a reminder of the immense toll that fraud takes on U.S. consumers.

This data should push all of us — anti-fraud advocates, law enforcement, policymakers and everyday consumers — to redouble our vigilance in the fight against scammers.

With Communities of Color Consumer Protection Symposium, NCL helps celebrate Black History Month – National Consumers League

February is Black History Month and reminds us of NCL’s deep historical connections to the Black community. W.E.B. DuBois, the renowned civil rights leader and first editor of the NAACP’s newspaper, The Crisis, was a brilliant scholar and close friend of Florence Kelley, NCL’s General Secretary. Kelley came from a Philadelphia Quaker family, raised with fiercely abolitionist beliefs with no tolerance for racial prejudice or discrimination.


She was furious when racial segregation practiced in hotels and restaurants made it difficult for her African American colleagues to attend meetings on minimum wage and child labor.

Earlier this month, NCL sponsored the Communities of Color Consumer Protection and Financial Services Symposium. The Joint Center for Political and Economic Studies – the only African America think tank in the US – co-hosted the program with the Center for Responsible Lending. The conference focused on telecom, fraud, student loans, auto loans and mortgage financing, with an emphasis on protecting the most vulnerable communities. These communities experience higher interest rates, rip off contract terms, and have had their family wealth wiped out by the subprime mortgage crisis in far larger proportions than their white counterparts.

We organized this conference to bring new voices into the consumer protection discussion. Representatives from La Raza, LULAC, NAACP and Urban League spoke at the event, along with Senator Elizabeth Warren (D-MA) and Congressman Keith Ellison (D-MN).

I learned a lot at about how financial institutions, car dealers and lenders, for profit colleges, and so many others target the black community for predatory practices and make billions in profits at the expense of these communities.

So as we celebrate Black History Month in 2014, it’s more important than ever that communities of color have the benefit of consumer protections and that regulators and legislators work on their behalf. NCL hopes to do a conference like this at least once a year. We will be following the wonderful example of great leaders like Florence Kelley and W.E.B. Dubois who 100 years ago worked together as partners and colleagues for the cause of social justice in America.

What’s new with gift cards this season? – National Consumers League

The Credit Card Accountability, Responsibility and Disclosure Act of 2009 that went into effect earlier this year mandated a lot of changes in the credit card industry. It also has some implications for the gift card industry. There’s good news for consumers planning to purchase gift cards for friends and loved ones this holiday season.

Here are the key elements of the new Credit CARD Act that affect gift cards:

Better expiration dates. Gift cards cannot expire less than five years after purchase.

Better fine print. the gift card issuers must clearly disclose dormancy and inactivity fees.

No more unused balance fees (for the first year). Starting now, no cards purchased in the previous 12 months can carry fees for going unused.  In the past, unused cards lost value more quiclkly due to these inactivity fees. The good news is that now, issuers must not start tacking on the fees for a full year. The bad news is that there is no limit on the amount of this fee, which can only be assessed once a month.

Fees subject to these restrictions include monthly maintenance or service fees, balance inquiry fees and transaction-based fees, such as reload fees and point-of-sale fees.

More you should know about gift cards

The new Credit CARD Act rules do not apply to reloadable prepaid cards that are not marketed or labeled as a gift card or gift certificate. They also don’t apply to prepaid cards received through a loyalty award or promotional program. The majority of the cards we’re used to seeing however, such as those offered by major retailers or card networks like Visa, Mastercard, or American Express, will be covered. However, consumers should be wary of reloadable cards or cards received through the loyalty and promotional programs. A card that would fall into this category is a free “loyalty card” that gives the user $10 off a $50 or more purchase from the same store.  Such cards must still clearly disclose expiration dates and associated fees. These may be hard to distinguish from cards that are covered by the rules.  Consumers should be sure to check the disclosure language on cards to ensure that they are purchasing cards that are covered.

Tips for buying and giving gift cards

  • Encourage the recipients of gift cards to use them quickly to avoid losing the value of the cards to fees.
  • Ask for a gift receipt for each card purchased and include the receipt when giving a gift card. This will allow the card holder to replace the card if it is lost or stolen.
  • Read all terms and conditions prior to purchasing a card. If the terms are not disclosed or if they are too difficult to understand, consider purchasing a different card.
  • Be wary of gift cards sold on online auction sites. These cards are often stolen or counterfeit.
  • Keep all gift cards and receipts in a safe, easily accessible place to avoid loss and neglect of gift cards.
  • If a card requires registration prior to use, be sure to do so soon after receiving the card.
  • If a card’s value is too low to cover an entire purchase, a merchant may be able to do a “split-tender” transaction that will allow part of a purchase to be paid with the gift card and the balance to be paid by another means (cash, check, credit/debit card). If an employee seems unsure how to conduct a “split-tender” transaction, ask a manager to help.
  • Be aware of state laws pertaining to gift cards. These may affect expiration dates, fees, and card replacement.
  • Don’t throw away depleted cards. Some merchants require a card for returns.

Consumer U: tips for college students – National Consumers League

Millions of young people are arriving on the nation’s college campuses this summer. Many of them will be embarking on a life without parents for the first time. Unfortunately, many of these young people will be entering the marketplace on their own, with precious little understanding of how to navigate it successfully. Worse, many students may fall prey to scams targeting college students.

With this in mind, here are a few tips for young consumers heading out on their own, whether to college or just their first apartment:

  • DO read the fine print. While credit card companies are now largely prevented from offering their wares on college campuses, there are still many “gotcha’s” lurking out there for unsuspecting consumers. Those gotcha’s love to hide in the fine print of things like apartment leases, gym memberships, cell phone contracts, student loan applications, spring break vacation package agreements and yes, credit card applications.
  • DON’T sign anything until you understand your responsibilities. Will you be locked in to that gym membership for years to come? Does that free t-shirt come with a credit card that has a high interest rate and annual fee? How much will it cost to break the lease on your apartment if your roommate unexpectedly moves out and leaves you with the full month’s rent?
  • DO make sure you have contact info (the phone numbers or Web addresses for services that can help) if you get in trouble. The local Better Business Bureau, Office of Tenant Advocate, and state and local consumer protection bureaus are good numbers to have handy if you feel that a local business or landlord is taking advantage of you.
  • DO create a budget and stick to it. Create a list of all the expenses you’ll be responsible for, like books, regular meals, rent, and transportation. That way you’ll have a system to help make sure nights out with friends don’t eat in to you required living expenses.
  • DON’T leave personal information unsecured. While young consumers may not have a lot of money to drain from bank or credit card accounts, their credit reports are often clean. This makes them tempting targets for identity thieves. File away important documents, shred credit card offers and keep a close eye on credit and debit card statements for suspicious charges.
  • DO watch out for scams targeting young people. For example, educational grant scams were on NCL’s Top Ten Scams list for 2009, suggesting that scammers may be going after students looking for ways to pay for college in a tough economic environment. Watch out for scams that promise “guaranteed scholarships” or “an inside track on getting money for college.” Also stay away from any service that requires a credit or debit card account number to apply for or hold a scholarship.
  • DON’T leave your social network privacy settings unattended. Scammers scan these networks for information they can use to pitch believable-sounding scams. It usually only takes a few minutes to set privacy settings to make them more secure. Many college students may be surprised to find just how much of their personal information they were sharing in the first place.

Consider these tips the beginning of your journey to becoming a savvy consumer. Remember that the good consumer habits you develop as a college student can yield benefits in school and beyond.

Gift Card Holder’s Bill of Rights – National Consumers League

The National Consumers League has been joined by Consumer Action and the Montgomery County, Md, Office of Consumer Protection to call on the gift card industry to ease the burden on consumers by lifting expiration dates, lowering fees, and more.

1. Gift cards should have no expiration dates.
Gift card holders have the expectation that their cards are as good as cash at a retailer. They should be able to use their cards regardless of when they received the card

2. The value of a gift cards should not be reduced by arbitrary fees that diminish a card’s value.
The funds available on gift cards are often reduced significantly by a variety of postsale fees (called “dormancy,” “inactivity,” or “maintenance” fees, depending on the card) if the value of the card has not been exhausted within six to 12 months of purchase. We believe the funds stored in these cards should be available to consumers to pay for goods and services, not the card issuer’s administrative costs.

3. Fees assessed on a card purchase should not exceed five dollars or ten percent of the value of the card.
The processing charges or sales fee charged at the point of sale for gift cards should be reasonable and consistent with the expected costs incurred by the card issuer to market the card and service the card post-sale.

4. Card replacement fees should not exceed two dollars or ten percent of the purchase price of the card, whichever is less.
Card holders lose cards for a variety of reasons, including theft. Fees associated with replacing the card should be reasonable.

5. Cards with a balance of five dollars or less should be redeemable for cash with no fee.

Many cards are unusable when consumers attempt to use them to make purchases greater than the value of a card. Many retailers are unable or unwilling to attempt a “split tender” transaction to address this issue. As such, we believe that consumers should be able to redeem gift cards with a remaining value of $5 or less for cash, without a fee.

6. Balance inquiries should not deduct from the value of the card.

Consumers may need to check the remaining balance on their cards from time to time. Doing so should not reduce the value of the card itself.

7. Terms and conditions should be clearly disclosed.
Consumers should be made aware of any fees associated with a card before purchasing it. Such terms and conditions should be viewable on the card itself, the card’s packaging, in-store display, and on an easily accessible Web site.

8. Unused funds should not go into the card issuers’ pockets, but should accrue to a state fund to be used for the specific benefit of consumers.
The residual value of lost or unused cards falling under states’ unclaimed property laws should be used to benefit consumers, not to the bottom lines of big banks and retailers. Appropriate uses of such monies would be a fund to compensate victims of consumer fraud, grants to non-profit organizations fighting fraud, and support for state programs to educate the public about consumer fraud.

9. Funds from the sale of gift cards should be segregated and held in trust accounts so as to be automatically honored in the event of the cards issuer’s bankruptcy.
Recent retailer bankruptcies have resulted in consumers being unable to use their gift cards or only being able to redeem t heir cards for pennies on the dollar. Consumers who purchase gift cards have, in effect, prepaid for goods and services and their purchases should be honored, regardless of the bankruptcy status of the card issuer.

10. These rights should cover any electronic gift card with a banked dollar value.

Consumers generally do not differentiate between gifts cards usable at a single retailer or multiple retailers. The rights afforded them should be consistent regardless of the issuer of the card.

NCL Testimony to House on abusive calling card industry – National Consumers League

In September 2008, Sally Greenberg appeared before the House Committee on Energy and Commerce to discuss the need for greater consumer protections in the purchase and use of prepaid calling cards, a largely unregulated industry that is a “Wild West” of sellers and merchants who too often prey upon the most vulnerable consumers by promising minutes they don’t deliver and loading up on hidden or undisclosed charges and fees.

In an industry like this, with low barriers to entry and a totally unregulated market, you can be sure there will be unscrupulous operators who will take the money and run.

Testimony of Sally Greenberg, Executive Director, National Consumers League before the U.S. House Energy and Commerce Committee on HR 3402, the “Calling Card Consumer Protection Act”

September 10, 2008

Good morning, Mr. Chairman. My name is Sally Greenberg and I am Executive Director of the National Consumers League. I appreciate this opportunity to appear before the House Committee on Energy and Commerce to discuss the need for greater consumer protections in the purchase and use of prepaid calling cards. This largely unregulated consumer product is a “Wild West” of sellers and merchants who too often prey upon the most vulnerable consumers by promising minutes they don’t deliver and loading up on hidden or undisclosed charges and fees. In an industry like this, with low barriers to entry and a totally unregulated market, you can be sure there will be unscrupulous operators who will take the money and run.

The National Consumers League, whose founding in 1899 makes us the oldest consumer organization in the United States, has a longstanding interest in protecting consumers from fraudulent practices and is the only consumer group that operates a national fraud center. (The NCL’s Fraud  Center is described at

I want to commend members of this Committee for giving scrutiny and attention to the issue of prepaid calling cards and to Congressman Engel for offering HR 3402, the “Calling Card Consumer Protection Act.”  Consumers rely on this committee to defend consumer rights and protections and to look out for consumers’ interest.  I will address some of the facts and figures describing the magnitude of the prepaid calling card industry and the large amounts of money involved. I’ll discuss the fraud and deceptive practices associated with that industry and actions taken at the state and federal levels in response to fraud. I’ll discuss why NCL supports the Engel bill, and I’ll make some policy recommendations.  Our written testimony also includes a timeline detailing the growth of the industry and the rise in fraud associated with that growth.

Let’s start with the industry. It is illustrative that the shady practices of the prepaid calling industry were featured prominently on the HBO series, The Sopranos. In Episode 26, Tony is discussing the mob’s work with prepaid cards. I’ve deleted the obscenities:

Tony Soprano: “So, telecommunications once again fails to disappoint. What’s this thing? Telephone calling cards. You find a front man who can get a line of credit, you buy a couple of million units of calling time from a carrier. You become “acme telephone card company”. “Acme”. You’re now in the business of selling prepaid calling cards. Immigrants especially, no offense. They’re always calling back home to whoever (deleted) And it’s expensive, right? You sell thousands of these cards to the (deleted), cards at a cut rate. But you bought the bulk time on credit, remember? The carrier gets stiffed. He cuts off the service to the card holders, but you already sold all your cards. That’s (deleted) beautiful! (Laughing) it’s a good one.”

Of course, we’re not suggesting that the whole prepaid calling card industry is controlled by organized crime: we have no such evidence, but this vignette from The Sopranos demonstrates how easy it is to get into the industry, rip off consumers, and disappear with no accountability whatsoever. That must change.

Prepaid Calling Card Facts

  • Prepaid cards are a $4 billion a year industry, responsible for 11 billion calls in 2004[1]
  • The industry is estimated to reach $6.4 billion in revenue in 2008.[2]
  • Examples of fraudulent practices used by the prepaid companies include “hang-up fees,” periodic maintenance fees, destination surcharges, and high billing increments.[5]
  • Companies that try to “play by the rules” are often punished by a loss of market share due to fraudulent carriers.[6]
  • Only 11 states, including California, Connecticut, Florida, and Illinois, currently have laws pertaining to calling card fraud, specifically. Most turn to generic consumer protection statutes, but enforcement has been extremely light.[7]
  • Hispanic consumers may be losing up to $1 million per day because of fraudulent phone cards.[4]
  • The average calling card delivers only 60% of the minutes promised, according to the Hispanic Institute, a non-profit research group.[3]
  • The Federal Trade Commission’s (FTC) survey of prepaid calling cards confirms the Hispanic Institute’s findings. For instance, one calling card tested by the FTC claimed to offer 360 minutes to Panama, but only delivered 23 minutes of calling time. The FTC said that in 87 tests of the prepaid cards, the cards delivered an average of only 50 percent of the advertised minutes.[8]
  • The cost-per-minute rates for prepaid phone cards can be up to 87 percent higher than expected. An expected call rate of 15 cents per minute, for example, may end up costing 28 cents per minute.[9]

Customer service representatives for prepaid calling cards are often unavailable or not knowledgeable regarding the prepaid phone cards their employers are selling. A 2005 University of Georgia study found that in a third of the calls to prepaid calling card customer service lines, callers couldn’t reach a representative. When they did make contact, the representative often was unable to answer basic questions about fees or rounding up of minutes.[10]

Why we need to protect users of prepaid calling cards

The rapid growth of the prepaid calling card industry combined with, until recently, a lax enforcement of consumer protection statues at the state and federal levels, has enabled consumer fraud to flourish. Like so many other scams, the most frequent victims of the fraud and deception are the most vulnerable consumers: immigrants and the working poor; and those lower income Americans who often cannot afford or obtain regular phone service.  These consumers rely on calling cards to stay in touch with friends and loved ones in the US and abroad. Sadly, we believe that military families are also likely victims of the prepaid card scams and rip-offs.

Yes, the cards provide these users with an alternative means of calling home, but many use false and deceptive practices in the process, and impose unconscionable terms. Fraud is fraud—if an automobile is sold with the promise of a sun roof and chrome wheels, it better have a sunroof and chrome wheels—if a phone card promises 500 minutes to call El Salvador, it should deliver those 500 minutes.

Some state attorneys general –have done a commendable job in prosecuting fraudulent prepaid card companies, including in Florida and Texas. The Federal Trade Commission has also conducted investigations and brought important cases against individual prepaid phone card providers.  Unfortunately, these scattered efforts are insufficient.  We need basic federal protections to stem the tide of the many deceptive practices in this industry.

NCL believes that giving the FTC greater authority, as called for in HR 3402 would help to level the playing field for all phone card providers.  Such regulations include requirements that prepaid phone card providers and distributors disclose the terms and conditions of the cards, and list the per minute rates, preferred international destination rates, and any fees or surcharges, in their advertising,

We need a national floor of minimum requirements stating what industry practices won’t be permitted. We applaud HR 3402’s provisions preserving the rights of states to go forward with their own civil cases—as Florida did. The federal government should set minimum standards and permit states to go forward with provisions that don’t conflict with the federal law. That’s a pro-consumer position and acknowledges the important role states have played in enacting and enforcing consumer protections.  But we also recommend that Section 7 in HR 3402 acknowledge and support the ability of  state utility commissioners or other authorized state consumer protection agencies to look into the practices of the prepaid calling card industry.

NCL believes that both the House bill, HR 3402, and Senator Bill Nelson’s bill, S. 2998, on prepaid calling cards, would go far in addressing the false promises and deception associated with these cards. In regard to unlawful conduct described in Section (b)(2) of HR 3402, we suggested the language be expanded to say not just “distribute” but includes those who sell, resell, issue as well as distribute the cards. Anecdotal evidence suggests that the simple threat of regulation has already increased pressure on the prepaid calling card industry to reform its marketing practices.[12] We’ve also seen evidence through the IDT settlement in Florida that if one company is forced to disclose accurately how many minutes a card will provide and what the surcharges and fees will be, they will lose market share to the other firms who are shading the truth. Therefore, we need to create a level playing field where all participants are required to provide accurate information.


Beyond disclosure: What more can we do to protect consumers?

While NCL supports efforts requiring require full disclosure of terms and conditions on these prepaid calling cards, we find that the terms themselves, when they are disclosed, are too often unconscionable.

For example, the text in fine print on the back of my $5.00 “Africa Sky” card states the following:

All of the following fees will reduce the number of available minutes and the value of the card. Use of a toll free number from a pay phone will incur a $.99 per call fee. Per minute rate will be .02 higher for calls placed using toll free access numbers. Call time for multiple calls is calculated by rounding the last minute up to the closest multiple of 3 and then adding 1 minute except that if your call lasts less than 1 minute you will be charged only for a minute. If available minutes are not all used up on the first call the following fees will apply (1) the multiple call rate will be 40% higher and will apply to all calls (see poster for details) (2) a fee per call of $.59 will apply to each call; and 3) on midnight after the first call a fee of $.69 will be deducted and then weekly thereafter. Card Expires Three Months After First Use. . . Rates and Fees are Introductory and are subject to change anytime. . . .

The same or similar text is found on most of the cards.  So, though we have the terms disclosed, albeit in fine print, we have a company that is rapidly subtracting money from the user’s original purchase. A 40% higher rate is imposed after the first call; a fee of 59 cents per call will apply to each one after the first call; and after midnight of the first call, the fee is 69 cents, which will be deducted weekly thereafter. This is from an original $5.00 card. No wonder users find that two or three weeks—or sooner—after first use, the card has no credit remaining. Notice the card also contains this catch-all phrase “Rates and Fees are Introductory and are subject to change anytime…” leaving the card distributors the option of changing the rules whenever they wish.

Worse still is the “Majestic DMV” Card I purchased for $2.00:

1) A .99 fee applies on the 1st day of use and every 5 days thereafter; 2) Calls made through toll free access numbers are subject to a fee of up to 4 cents a minute 3) payphone surcharge of .99 4) A destination surcharge of between 20-60% of the total call; and/or 5) a fee of .10-.99 for connected calls, .15/minute maximum domestic call rate (before applicable charges and fees); minutes and/or seconds are billed at a minimum of one minute and up to 5 minute increments, plus any applicable fees. Card expires 3 months after first use or 12 months after activation.

As a consumer advocate, I’ve often found it useful to look at consumer protection measures in other countries. I lived in Australia two years ago and used prepaid cards for calls to the United States. My experience was uniformly positive—the Australian prepaid cards tended to deliver the minutes they promise, and they were good for multiple uses. Choice Magazine, Australia’s counterpart to our Consumer Reports, tested these international calling cards and found that indeed, many delivered good value and low rates without connection fees or added charges. When I arrived back in the United States and began buying cards here, I found that their value tended to disappear after the first call. When I read the fine print, I understood why.

I also consulted the document Consumer Protection in the European UnionTen Basic Principles—and note that the Fifth Principle is relevant to our discussion of prepaid calling cards:

Contracts Should Be Fair To Consumers

Have you ever signed a contract without reading all the small print? What if the small print says the deposit you just paid is non-refundable – even if the company fails to deliver its side of the bargain? What if it says you cannot cancel the contract unless you pay the company an extortionate amount in compensation? EU law says these types of unfair contract terms are prohibited. Irrespective of which EU country you sign such a contract in, EU law protects you from these sorts of abuses.

We could apply the EU’s notion of contract fairness to this issue. NCL supports HR 3402 disclosure requirements and hopes that they will satisfactorily address the problem of consumers paying good money for a prepaid calling card that fails to deliver the service. An open marketplace where all prepaid calling card companies are providing accurate information may do the trick; the market has a way of working very effectively consumers have accurate information upon which to compare rates.

NCL would like to suggest, however, that after passage of your bill, the FTC closely monitor the industry and in a year’s time, report on whether disclosure is addressing the problem adequately.

The Greek Diogenes called the market “a place set apart where men can deceive each other.” We must impose some limits on that paradigm. If after a year we still see failure to accurately disclose rates and unconscionable terms when the rates are disclosed, we would urge this Committee to consider stronger regulation of this industry.

NCL policy recommendations related to disclosure and HR 3402

The National Consumers League strongly supports HR 3402 and its provisions to give enforcement authority to the Federal Trade Commission under the “unfair or deceptive act or practice,” clauses of the Federal Trade Commission Act. While prepaid calling cards generally offer savings on international long distance calling versus traditional “Dial 1,” 10-10 dial-around and wireless long distance calling,[13] these savings are no excuse for fraud or deception.

We also support FTC’s call to appoint a monitor to oversee the prepaid calling card business,[14] and a requirement that the FTC report back to Congress on a periodic basis regarding the status of its efforts to enforce the terms of the proposed legislation.

As a general proposition, we applaud the requirements included in the Florida Attorney General’s June 2008 settlement with prepaid card companies, such as:

  • Ceasing all deceptive advertising
  • Providing 100% of the minutes advertised
  • Not using hidden fees or misleading minute calculations to increase their profits at consumers’ expense
  • Printing disclosures for a given card in any language used to advertise that card
  • Printing the exact number of minutes available and the card’s expiration date (if applicable) on the card
  • Prohibiting naming of card surcharges to resemble taxes
  • Requiring one-minute increment billing

While HR 3402 requires disclosure of the name of the prepaid calling card service provider, we recommend that this section of the bill be expanded to include requiring the address of card originator and a toll free number, and that operators answering the phone be able to speak the language in which the card was advertised. The requisite disclosures should be in the same language. We also support requiring that the disclosure text on the calling card itself, packaging, or other promotional material (including online) be in same language used to advertise the card.

Further recommended action if disclosure requirements are not sufficient

If after one year, the FTC reports back to Congress with evidence indicating that greater disclosure is not reducing the consumer abuses in the industry, we recommend that further action be considered by this Committee, with the Federal Trade Commission given the authority to enforce these provisions:

  • Require all market entrants to be licensed and post a bond before marketing cards to consumers.  That bond would go into a fund to compensate consumers who are victims of fraud. Those companies that market prepaid calling cards should also be required to provide a name, address and place of incorporation. Right now, the barriers to entry are so low and the penalties for not making good on the value of the cards are so minimal that it’s simply open season on consumers. We believe requiring a bond will act to keep many bad actors out of the industry.
  • Require all market entrants to have a 24 hour, 7 days a week toll free number that has a live person on the other end who must be knowledgeable about the use of the card.
  • Require that fees and surcharges imposed be related to actual costs. Congress has imposed rules on other industries that were charging consumers outrageous fees – the moving van industry, payday lenders, and funeral homes, to name a few. If, in a year’s time, this Committee finds that disclosure is not easing the deception and rip-offs that plague this industry, the Committee should consider imposing stronger regulations on prepaid calling card companies and the many fees and surcharges they impose on consumers.
  • Require that all cards have an expiration date and that this date be no shorter than one year after activation. If a seller fails to make a disclosure on expiration, the card should be valid indefinitely.
  • Require sellers to list the minimum charge per call and the balance in minutes and dollars remaining on the card.
  • Require sellers to inform consumers, via a website or toll-free phone number, of any proposed changes in terms and conditions, with consumers given the chance to reject these changes and receive a refund on the card with no fee imposed for requesting such a refund within an appropriate grace period of no less than 30 days after posting of the proposed change.  Prepaid calling card providers should also be required to prominently list a mailing address to which customers can direct refund requests and/or a website with a refund form that the consumer can access easily.
  • Require uniform terms in all prepaid calling card contracts so that consumers can comparison shop. Companies should not be allowed to confuse consumers by using a variety of terms for charges such as “administrative fee” or “service fee.”
  • The amounts involved in prepaid phone card transactions are too small for any one individual to bring a case to court. The only meaningful way to allow consumers to hold prepaid card sellers accountable is through use of the class action process. Consumers need to be guaranteed a private right of action and the ability to band together as a class to bring cases against dishonest prepaid phone card providers.


We strongly support HR 3402 and commend this Committee for holding the hearing today. By requiring much better disclosure on prepaid calling cards, this bill will help to mitigate the deception and fraud associated with these cards. We also support further monitoring of the industry by the FTC, which will in turn report to the members of this Committee.

NCL also urges Congress to find a way to require that prepaid calling card companies go beyond simple disclosure of their onerous rates. The most vulnerable consumers—military families, immigrants, low income families —rely on these cards and spend their hard-earned money only to see the value of the cards disappear quickly after first use. NCL believes we can do better by consumers. We support the disclosure required under this bill and hope that it works. If we need to take stronger action, this bill’s requirements will represent an excellent first step.

Thank you, Mr. Chairman, for giving the National Consumers League this opportunity to comment on your bill. We commend you for your pro-consumer record and look forward to working with you and your staff to see this bill enacted into law.

Issue Timeline

We have provided a timeline of enforcement actions and legal settlements pertaining to prepaid calling cards below.

1986 Prepaid calling cards introduced to the North American market.[15]

1996 U.S. prepaid card sales reach $1.1 billion[16]

April 2001 New York Attorney General Eliot Spitzer announces settlement with five
companies accused of deceptively marketing prepaid telephone cards throughout upstate New York. This settlement was part of Spitzer’s ongoing efforts to combat illegal marketing practices of prepaid phone card companies dating back to 1999.[17]

2006 Newark, NJ-based IDT Corp., the largest prepaid calling card company in the
U.S. reports $2.2 billion in total sales.[18]

2007 U.S. prepaid market reaches $4 billion in revenue

January 2007 IDT Corp. settles federal class action suit brought on behalf of hundreds of
phone card customers alleging fraudulent and deceptive advertising practices.[19]

March 2007 IDT files lawsuit against 9 competitors, alleging that they provide 40% less
time than advertised. Epana Networks, Dollar Phone, and Locus Telecommunications quickly reach settlement with IDT, agreeing to cease any misleading marketing practices. Six other companies named in the suit, including CVT Prepaid Solutions Inc. issue an open letter to the industry, claiming that IDT’s suit is “nothing but an underhanded ploy to regain lost market share by intimidation.”[20]

July 2007 Florida Attorney General Bill McCollum announces investigation of 10 prepaid
calling card companies for fraudulent or deceptive advertising.[21]

August 2007 Representative Eliot Engel (D-NY) introduces H.R. 3402 “Calling Card Consumer Protection Act.”[22]

March 2008 FTC asks U.S. District Court for the District of New Jersey to halt allegedly illegal marketing practices of prepaid card companies CTA Inc., Clifton Telecard Alliance One LLC, and Mustafa Qattous.[23]

May 8, 2008 Senator Bill Nelson (D-FL) introduces S. 2998 “Prepaid Calling Card Consumer Protection Act of 2008.”[24]

May 23, 2008 Texas Attorney General Greg Abbott announces filing of legal enforcement
action against prepaid calling card company Next-G Communications, Inc. over allegedly deceptive marketing practices employed by the company.[25]


[1] “THI Praises FTC for Standing Against Calling Card Fraud,” The Hispanic Institute. 2007. Retrieved on July 24, 2008.

[2] “Prepaid Calling Cards: Market Dynamics and Forecast 2003-2008,” ATLANTIC-ACM. February 2003. Retrieved on July 25, 2008.

[3] Ibid.

[4] “Facts and Figures,” The Hispanic Institute. Retrieved on July 24, 2008.

[5] Office of the Attorney General of Florida (June 11, 2008). “McCollum Announces Prepaid Calling Card Settlements, Industry-Wide Reform”. Press release. Retrieved on July 24, 2008.

[6] Holden, Diana. “Calling Out Prepaid Phone Cards,” BusinessWeek. July 9, 2008. Retrieved July 24, 2008.

[7] “Facts and Figures,” The Hispanic Institute. Retrieved on July 24, 2008.

[8] Dang, Dan Thanh. “Avoid These Prepaid Calling Cards, FTC says,” Baltimore Sun. June 6, 2008. Retrieved July 24, 2008.

[9] Horton, Denise. “Prepaid Phone Cards: Caller Beware,” University of Georgia Research Magazine. Fall 2005. Retrieved on July 24, 2008.

[10] Ibid.

[11] “Calling Card Questions & Answers,” The Hispanic Institute. Retrieved on July 25, 2008.

[12] Marshalian, Jonathan. “You’ve Come a Long Way, Baby,” The Prepaid Press. September 17, 2007. Retrieved July 25, 2008.

[13] “Facts and Figures,” The Hispanic Institute. Retrieved on July 24, 2008.

[14] Federal Trade Commission (March 26, 2008). “FTC Asks Court to Halt Prepaid Calling Card Scam; Alleges Consumers Receive Fewer Calling Minutes Than Advertised and Pay Hidden Fees”. Press release. Retrieved on July 24, 2008.

[15] Frost and Sullivan. “North American Prepaid Calling Cards Market,” August 10, 2006. Retrieved on July 25, 2008.

[16] “Prepaid Phone Cards: The Facts,” State of New York Attorney General. Retrieved on July 25, 2008.

[17] Office of the New York State Attorney General (April 11, 2001). “Prepaid Phone Card Sweep Cleans Up Deceptive Posters”. Press release. Retrieved on July 25, 2008.

[18] “Talk Isn’t So Cheap,” BusinessWeek. July 23, 2007. Retrieved on July 25, 2008.

[19] IDT Corporation (January 25, 2007). “IDT Reaches a Settlement in Calling Card Class Action Lawsuit”. Press release. Retrieved on July 25, 2008.

[20] Hatcher, Monica. “McCollum probes calling card deceptions,” The Miami Herald. July 24, 2007.

[21] Hatcher, Monica. “McCollum probes calling card deceptions,” The Miami Herald. July 24, 2007.

[22] U.S. House. 110th Congress, 1st session. H.R. 3402, Calling Card Consumer Protection Act. ONLINE. Available at [Retrieved on July 25, 2008].

[23] Federal Trade Commission (March 26, 2008). “FTC Asks Court to Halt Prepaid Calling Card Scam; Alleges Consumers Receive Fewer Calling Minutes Than Advertised and Pay Hidden Fees”. Press release. Retrieved on July 25, 2008.

[24] U.S. Senate. 110th Congress, 2nd session. S. 2998, Prepaid Calling Card Consumer Protection Act of 2008. ONLINE. Available at [Retrieved on July 25, 2008].

[25] Attorney General of Texas (May 23, 2008). “Attorney General Abbott Takes Legal Action Against Prepaid Calling Card Company”. Press Release. Retrieved on July 25, 2008.