89–006 

111TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 111–507 

CALLING CARD CONSUMER PROTECTION ACT 

JUNE 15, 2010.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. WAXMAN, from the Committee on Energy and Commerce, 

submitted the following 

R E P O R T 

[To accompany H.R. 3993] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Energy and Commerce, to whom was referred 

the bill (H.R. 3993) to require accurate and reasonable disclosure 

of the terms and conditions of prepaid telephone calling cards and 

services, having considered the same, report favorably thereon with 

an amendment and recommend that the bill as amended do pass. 

CONTENTS 

Page 

Amendment .............................................................................................................. 2 

Purpose and Summary ............................................................................................ 6 

Background and Need for Legislation .................................................................... 6 

Legislative History .................................................................................................. 7 

Committee Consideration ........................................................................................ 7 

Committee Votes ...................................................................................................... 8 

Committee Oversight Findings and Recommendations ........................................ 8 

New Budget Authority, Entitlement Authority, and Tax Expenditures ............. 8 

Statement of General Performance Goals and Objectives .................................... 8 

Constitutional Authority Statement ...................................................................... 8 

Earmarks and Tax and Tariff Benefits .................................................................. 8 

Advisory Committee Statement .............................................................................. 8 

Applicability of Law to the Legislative Branch ..................................................... 8 

Federal Mandates Statement ................................................................................. 9 

Committee Cost Estimate ....................................................................................... 9 

Congressional Budget Office Estimate ................................................................... 9 

Section-by-Section Analysis of the Legislation ...................................................... 10 

Explanation of Amendments ................................................................................... 13 

Changes in Existing Law Made by the Bill, as Reported ..................................... 13 


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AMENDMENT

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Calling Card Consumer Protection Act’’. 

SEC. 2. DEFINITIONS. 

For purposes of this Act, the following definitions apply: 

(1) The term ‘‘Commission’’ means the Federal Trade Commission. 

(2) The term ‘‘prepaid calling card’’ has the meaning given the term ‘‘prepaid 

calling card’’ by section 64.5000(a) of the Federal Communications Commission’s 

regulations (47 C.F.R. 64.5000(a)). Such term shall also include calling cards 

that use VoIP service or a successor protocol. Such term shall also include an 

electronic or other mechanism that allows users to pay in advance for a specified amount of calling. Such term shall not include— 

(A) calling cards or other rights of use that are provided for free or at 

no additional cost as a promotional item accompanying a product or service 

purchased by a consumer; 

(B) any card, device, or other right of use, the purchase of which establishes a customer-carrier relationship with a provider of wireless telecommunications service or wireless hybrid service, or that provides access 

to a wireless telecommunications service or wireless hybrid service account 

wherein the purchaser has a pre-existing relationship with the wireless 

service provider; or 

(C) payphone service, as that term is defined in section 276(d) of the 

Communications Act of 1934 (47 U.S.C. 276(d)). 

(3) The term ‘‘prepaid calling card provider’’ has the meaning given the term 

‘‘prepaid calling card provider’’ by section 64.5000(b) of the Federal Communications Commission’s regulations (47 C.F.R. 64.5000(b)). Such term shall also include— 

(A) a provider of a prepaid calling card that uses VoIP service or a successor protocol; and 

(B) a provider of a prepaid calling card that allows users to pay in advance for a specified amount of minutes through an electronic or other 

mechanism. 

(4) The term ‘‘prepaid calling card distributor’’ means any entity or person 

that purchases prepaid calling cards from a prepaid calling card provider or another prepaid calling card distributor and sells, re-sells, issues, or distributes 

such cards to one or more distributors of such cards or to one or more retail 

sellers of such cards. Such term shall not include— 

(A) any retail seller whose only activity with respect to the sale of prepaid 

calling cards is point-of-sale transactions with end-user customers; or 

(B) any person whose only activity with respect to the sale of prepaid calling cards is the transport or delivery of such cards. 

(5) The term ‘‘wireless hybrid service’’ is defined as a service that integrates 

both commercial mobile radio service (as defined by section 20.3 of the Federal 

Communications Commission’s regulations (47 C.F.R. 20.3)) and VoIP service. 

(6) The term ‘‘VoIP service’’ has the meaning given the term ‘‘interconnected 

Voice over Internet protocol service’’ by section 9.3 of the Federal Communications Commission’s regulations (47 C.F.R. 9.3). Such term shall include any 

voice calling service that utilizes a voice over Internet protocol or any successor 

protocol in the transmission of the call. 

(7) The term ‘‘fees’’ includes all charges, fees, taxes, or surcharges applicable 

to a prepaid calling card that are— 

(A) required by Federal law or regulation or order of the Federal Communications Commission or by the laws and regulations of any State or political subdivision of a State; or 

(B) expressly permitted to be assessed under Federal law or regulation 

or order of the Federal Communications Commission or under the laws and 

regulations of any State or political subdivision of a State. 

(8) The term ‘‘additional charge’’ means any charge assessed by a prepaid calling card provider or prepaid calling card distributor for the use of a prepaid 

calling card, other than a fee or rate. 

(9) The term ‘‘international preferred destination’’ means one or more specific 

international destinations named on a prepaid calling card or on the packaging 

material accompanying a prepaid calling card. 


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SEC. 3. REQUIRED DISCLOSURES OF PREPAID CALLING CARDS. 

(a) REQUIRED DISCLOSURE.—Any prepaid calling card provider or prepaid calling 

card distributor shall accurately disclose the following information relating to the 

terms and conditions of the prepaid calling card: 

(1) The name of the prepaid calling card provider and such provider’s customer service telephone number and hours of service, except that the hours of 

service may not be required to be disclosed if the provider’s customer service 

is provided and available 24 hours a day, 7 days per week. 

(2)(A) The number of domestic interstate minutes available from the prepaid 

calling card and the number of available minutes for all international preferred 

destinations served by the prepaid calling card at the time of purchase; or 

(B) the dollar value of the prepaid calling card, the domestic interstate rate 

per minute provided by such card, and the applicable per minute rates for all 

international preferred destinations served by the prepaid calling card at the 

time of purchase. 

(3)(A) The applicable per minute rate for all individual international destinations served by the card at the time of purchase; or 

(B) a toll-free customer service number and website (if the provider maintains 

a website) where a consumer may obtain the information described in subparagraph (A) and a statement that such information may be obtained through such 

toll-free customer service number and website. 

(4) The following terms and conditions pertaining to, or associated with, the 

use of the prepaid calling card: 

(A) Any applicable fees associated with the use of the prepaid calling 

card. 

(B) A description of any additional charges associated with the use of the 

prepaid calling card and the amount of such charges. 

(C) Any limitation on the use or period of time for which the promoted 

or advertised minutes or rates will be available. 

(D) A description of the applicable policies relating to refund, recharge, 

and any predetermined decrease in value of such card over a period of time. 

(E) Any expiration date applicable to the prepaid calling card or the minutes available with such calling card. 

(b) LOCATION OF DISCLOSURE AND LANGUAGE REQUIREMENT.— 

(1) CLEAR AND CONSPICUOUS.— 

(A) CARDS.—The disclosures required under subsection (a) shall be printed in plain English language (except as provided in paragraph (2)) in a 

clear and conspicuous manner and location on the prepaid calling card, except as the Commission may provide under paragraph (3). If the card is enclosed in packaging that obscures the disclosures on the card, such disclosures also shall be printed on the outside packaging of the card. 

(B) ONLINE SERVICES.—In addition to the requirements under subparagraph (A), in the case of a prepaid calling card that consumers purchase 

via the Internet, the disclosures required under subsection (a) shall be displayed in plain English language (except as provided in paragraph (2)) in 

a clear and conspicuous manner and location on the Internet website that 

the consumer must access prior to purchasing such card. 

(C) ADVERTISING AND OTHER PROMOTIONAL MATERIAL.—Any advertising or 

other promotional material for a prepaid calling card that contains any representation, expressly or by implication, regarding the dollar value, the per 

minute rate, or the number of minutes provided by the card shall include 

in a clear and conspicuous manner and location all the disclosures described in subsection (a), except as the Commission may provide under 

paragraph (3). 

(2) FOREIGN LANGUAGES.—If a language other than English is prominently 

used on a prepaid calling card, its packaging, or in point-of-sale advertising, 

Internet advertising, or promotional material for such card, the disclosures required by this section shall be disclosed in that language on such card, packaging, advertisement, or promotional material. 

(3) DIFFERENT LOCATION OF CERTAIN INFORMATION AS DETERMINED BY COMMISSION.—Notwithstanding the requirements of paragraph (1), the Commission 

may determine that some of the information required to be disclosed pursuant 

to subsection (a) does not need to be disclosed on the prepaid calling card, advertising, or other promotional material, if the Commission by regulation— 

(A) requires the information to be otherwise disclosed and available to 

consumers; and 

(B) determines that— 

(i) such disclosures provide for easy comprehension and comparison 

by consumers; and 


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(ii) the remaining disclosures on the prepaid calling card, advertising, 

or other promotional material, include sufficient information to allow a 

consumer to effectively inquire about or seek clarification of the services provided by the calling card. 

(c) MINUTES ANNOUNCED, PROMOTED, OR ADVERTISED THROUGH VOICE

PROMPTS.—Any information provided to a consumer by any voice prompt given to 

the consumer at the time the consumer uses the prepaid calling card relating to the 

remaining value of the calling card or the number of minutes available from the 

calling card shall be accurate, taking into account the application of the fees and 

additional charges required to be disclosed under subsection (a). 

(d) DISCLOSURES REQUIRED UPON PURCHASE OF ADDITIONAL MINUTES.—If a prepaid calling card permits a consumer to add value to the card or purchase additional 

minutes after the original purchase of the prepaid calling card, any changes to the 

rates or additional charges required to be disclosed under subsection (a) shall apply 

only to the additional minutes to be purchased and shall be disclosed clearly and 

conspicuously to the consumer before the completion of such purchase. 

(e) NO FALSE, MISLEADING, OR DECEPTIVE DISCLOSURES.—No prepaid calling card, 

packaging, advertisement, or other promotional material containing a disclosure required pursuant to this section shall contain any false, misleading, or deceptive representations relating to the terms and conditions of the prepaid calling card. 

SEC. 4. FEDERAL TRADE COMMISSION AUTHORITY. 

(a) UNFAIR AND DECEPTIVE ACT OR PRACTICE.—A violation of section 3 shall be 

treated as a violation of a rule defining an unfair or deceptive act or practice prescribed under section 18(a)(1)(B) of the Federal Trade Commission Act (15 U.S.C. 

57a(a)(1)(B)). 

(b) AUTHORITY OF THE COMMISSION.—The Commission shall enforce this Act in 

the same manner and by the same means as though all applicable terms and provisions of the Federal Trade Commission Act were incorporated into and made a part 

of this Act. Notwithstanding any provision of the Federal Trade Commission Act or 

any other provision of law and solely for purposes of this Act, common carriers subject to the Communications Act of 1934 (47 U.S.C. 151 et seq.) and any amendment 

thereto shall be subject to the jurisdiction of the Commission. 

(c) RULEMAKING AUTHORITY.—Not later than 1 year after the date of enactment 

of this Act, the Commission shall, in consultation with the Federal Communications 

Commission and in accordance with section 553 of title 5, United States Code, issue 

regulations to carry out this Act. In promulgating such regulations, the Commission 

shall— 

(1) take into consideration the need for clear disclosures that provide for easy 

comprehension and comparison by consumers, taking into account the size of 

prepaid calling cards; and 

(2) give due consideration to the views of the Federal Communications Commission with regard to matters for which that Commission has particular expertise and authority and shall take into consideration the views of States. 

In promulgating such regulations, the Commission may prescribe requirements concerning the order, format, presentation, and design of disclosures required by this 

Act and may establish and require the use of uniform terms, symbols, or categories 

to describe or disclose fees and additional charges, if the Commission finds that such 

requirements will assist consumers in making purchasing decisions and effectuate 

the purposes of this Act. The Commission shall not issue regulations that otherwise 

specify the rates, terms, and conditions of prepaid calling cards. 

(d) SAVINGS PROVISION.—Nothing in this Act shall be construed to limit the authority of the Commission under any other provision of law. Except to the extent 

expressly provided in this Act, nothing in this Act shall be construed to alter or affect the exemption for common carriers provided by section 5(a)(2) of the Federal 

Trade Commission Act (15 U.S.C. 45(a)(2)). Nothing in this Act is intended to limit 

the authority of the Federal Communications Commission. 

(e) COORDINATION.—If the Federal Communications Commission initiates a rulemaking proceeding to establish requirements relating to the disclosure of terms and 

conditions of prepaid calling cards, the Federal Communications Commission shall 

coordinate with the Federal Trade Commission to ensure that any such requirements are not inconsistent with the requirements of this Act and the regulations 

issued under subsection (c). 

SEC. 5. STATE ENFORCEMENT. 

(a) IN GENERAL.— 

(1) CIVIL ACTIONS.—In any case in which the attorney general of a State, a 

State utility commission, or other consumer protection agency has reason to believe that an interest of the residents of that State has been or is threatened 

or adversely affected by the engagement of any person in a practice that is proVerDate Mar 15 2010 06:36 Jun 16, 2010 Jkt 008006 PO 00000 Frm 00004 Fmt 6659 Sfmt 6621 E:\HR\OC\HR507.XXX HR507

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hibited under this Act, the State utility commission or other consumer protection agency, if authorized by State law, or the State, as parens patriae, may 

bring a civil action on behalf of the residents of that State in a district court 

of the United States of appropriate jurisdiction, or any other court of competent 

jurisdiction to— 

(A) enjoin that practice; 

(B) enforce compliance with this Act; 

(C) obtain damage, restitution, or other compensation on behalf of residents of the State; or 

(D) obtain such other relief as the court may consider to be appropriate. 

(2) NOTICE TO THE COMMISSION.— (A) IN GENERAL.—Before filing an action under paragraph (1), the State 

shall provide to the Commission— 

(i) written notice of the action; and 

(ii) a copy of the complaint for the action. 

(B) EXEMPTION.— (i) IN GENERAL.—Subparagraph (A) shall not apply with respect to 

the filing of an action by a State under this subsection, if the attorney 

general or other appropriate officer determines that it is not feasible to 

provide the notice described in that subparagraph before the filing of 

the action. 

(ii) NOTIFICATION.—In an action described in clause (i), the State 

shall provide notice and a copy of the complaint to the Commission at 

the same time as the State files the action. 

(b) INTERVENTION BY COMMISSION.— (1) IN GENERAL.—On receiving notice under subsection (a)(2), the Commission 

shall have the right to intervene in the action that is the subject of the notice. 

(2) EFFECT OF INTERVENTION.—If the Commission intervenes in an action 

under subsection (a), it shall have the right— 

(A) to be heard with respect to any matter that arises in that action; 

(B) to remove the action to the appropriate United States District Court; 

and 

(C) to file a petition for appeal. 

(c) CONSTRUCTION.—For purposes of bringing any civil action under subsection (a), 

nothing in this section shall be construed to prevent an attorney general of a State, 

a State utility commission, or other consumer protection agency authorized by State 

law from exercising the powers conferred on the attorney general or other appropriate official by the laws of that State to— 

(1) conduct investigations; 

(2) administer oaths or affirmations; 

(3) compel the attendance of witnesses or the production of documentary and 

other evidence; or 

(4) enforce any State law. 

(d) ACTION BY THE COMMISSION MAY PRECLUDE STATE ACTION.—In any case in 

which an action is instituted by or on behalf of the Commission for violation of this 

Act, or any regulation issued under this Act, no State may, during the pendency of 

that action, institute an action under subsection (a) against any defendant named 

in the complaint in that action for violation of this Act or regulation. 

(e) VENUE; SERVICE OF PROCESS.— 

(1) VENUE.—Any action brought under subsection (a) may be brought in the 

district court of the United States that meets applicable requirements relating 

to venue under section 1391 of title 28, United States Code. 

(2) SERVICE OF PROCESS.—In an action brought under subsection (a), process 

may be served in any district in which the defendant— 

(A) is an inhabitant; or 

(B) may be found. 

SEC. 6. APPLICATION. 

This Act shall apply to— 

(1) any prepaid calling card issued or placed into the stream of commerce beginning 180 days after the date on which final regulations are promulgated pursuant to section 4(c); and 

(2) any advertising, promotion, point-of-sale material or voice prompt regarding a prepaid calling card that is disseminated beginning 180 days after the 

date on which final regulations are promulgated pursuant to section 4(c). 

SEC. 7. EFFECT ON STATE LAWS. 

After the date on which final regulations are promulgated pursuant to section 

4(c), no State or political subdivision of a State may establish or continue in effect 

any provision of law that contains requirements regarding disclosures to be printed 


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1Prepaid phone card industry under attack, MSNBC.com (Oct. 23, 2008) (online at http:// 

www.msnbc.msn.com/id/27327684). 2Mark E. Budnitz, Martina Rojo, and Julia Marlowe, Deceptive Claims for Prepaid Telephone 

Cards and the Need for Regulation, 19 Loyola Consumer L. Rev. 1 (2006). 3Talk Isn’t So Cheap on a Phone Card, Business Week (July 23, 2007) (online at http:// 

www.businessweek.com/magazine/content/07l30/b4043079.htm). 4Fraud plagues prepaid calling card market, Associated Press (Oct. 6, 2008) (online at http:// 

www.msnbc.msn.com/id/27052474/). 5The Hispanic Institute, Calling Card Verification Test Plan (2007) (online at http:// 

thehispanicinstitute.net/files/Test%20Plan.pdf). 6The Hispanic Institute, Facts & Figures (online at http://thehispanicinstitute.net/research/ 

callingcard/scamfacts). 7The Hispanic Institute, Calling Card Verification Test Plan (2007) (online at http:// 

thehispanicinstitute.net/files/Test%20Plan.pdf). 

on prepaid calling cards or packaging unless such requirements are identical to the 

requirements of section 3. 

SEC. 8. STUDIES. 

(a) GAO STUDY.—Beginning 2 years after the date on which final regulations are 

promulgated pursuant to section 4(c), the Comptroller General shall conduct a study 

of the effectiveness of this Act and the disclosures required under this Act and shall 

submit a report of such study to Congress not later than 3 years after the date of 

enactment of this Act. 

(b) FTC STUDY.—The Commission shall, in consultation with the Federal Communications Commission, conduct a study of the extent to which the business practices 

of the prepaid calling card industry intended to be addressed by this Act exist in 

the prepaid wireless industry and shall submit a report of such study, including recommendations, if any, to Congress not later than 3 years after the date of enactment of this Act. 

PURPOSE AND SUMMARY

H.R. 3993 was introduced on November 3, 2009, by Rep. Eliot L. 

Engel (D–NY). H.R. 3993 is intended to prevent fraud and abuse 

in the prepaid calling card industry and to provide consumers with 

accurate and understandable information about the rates, fees, 

terms, and conditions associated with particular cards. 

BACKGROUND AND NEED FOR LEGISLATION

The prepaid calling card market is a large and growing industry. 

The cards are appealing because they allow the purchaser to call 

another phone, even overseas, from anywhere in the United States 

without committing to a long term relationship with a phone company. Also, they often offer consumers significantly reduced per 

minute rates. In 2007, American consumers spent roughly $4 billion dollars on these cards.1 These cards are generally marketed to 

particular groups of consumers, including immigrants, college students, and military personnel.2 For many immigrants living in the 

U.S., the prepaid calling card is the primary method for staying in 

touch with family abroad.3

Unfortunately, the prepaid calling card market is permeated by 

fraudulent and deceptive practices. Studies have found that many 

of the prepaid calling cards sold in the marketplace today fail to 

deliver the full number of advertised minutes.4 In 2007, the Hispanic Institute conducted a study of prepaid calling cards to determine what percentage of minutes consumers could expect to receive 

from the standard prepaid calling card.5 On average, the study 

found that consumers could expect to receive only 60% of the minutes promised on the card.6 Moreover, of the 45 cards tested, eight 

cards provided less than half of the minutes promised and seven 

cards failed to produce any minutes at all.7 Similarly, the Federal 

Trade Commission (FTC) reviewed consumer complaints in this 


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8Federal Trade Commission, Buying Time: The Facts About Pre-Paid Phone Cards (Mar. 

2008) (online at http://www.ftc.gov/bcp/edu/pubs/consumer/products/pro04.shtm). 

area and noted a range of problems associated with prepaid calling 

cards. The FTC observed that many prepaid calling cards contain 

hidden charges, such as connection fees, maintenance fees, disconnect fees, and inconsistent rate-per-minute surcharges, which 

result in cards that do not produce the number of minutes promised to the consumer at the point of sale.8 In short, consumers 

often find that because of misleading information, inconsistent 

claims, and buried disclosures, they receive significantly less than 

they bargained for, with little recourse. 

To address these issues, H.R. 3993 would require calling card 

providers and distributors to clearly and conspicuously disclose all 

relevant and applicable information to consumers. These disclosures would include contact information for the provider, the number of minutes available or the dollar value of the card. Entities 

also would be required to disclose any applicable fees, additional 

charges, limitations, changes in value, or expiration dates associated with the use of the card. In some cases, these disclosures also 

would be required to appear on calling card advertisements and 

voice prompts. The bill would provide the FTC with the authority 

to enforce these requirements and to promulgate regulations to 

carry out the Act. States also are authorized to enforce the Act. 

LEGISLATIVE HISTORY

The Calling Card Consumer Protection Act was first introduced 

on August 3, 2007, by Rep. Engel in the 110th Congress as H.R. 

3402. The House passed the bill under suspension of the rules by 

a voice vote on September 25, 2008. 

In the 111th Congress, Rep. Engel re-introduced the Calling 

Card Consumer Protection Act on November 3, 2009, and H.R. 

3993 was referred to the Committee on Energy and Commerce. The 

bill was referred to the Subcommittee on Commerce, Trade, and 

Consumer Protection on November 4, 2010, and the Subcommittee 

held a legislative hearing to examine the bill on December 3, 2009. 

Testimony was heard from witnesses representing the Division of 

Marketing Practices of the FTC; the National Consumer League; 

the New York State Public Service Commission as a member of the 

National Association of Regulatory Utility Commissioners; the 

United African Organization; and the American Wholesale Marketers Association. 

COMMITTEE CONSIDERATION

On March 24, 2010, the Subcommittee met in open markup session to consider H.R. 3993. The Subcommittee approved a manager’s amendment by Mr. Rush and subsequently forwarded H.R. 

3993, amended, favorably to the full Committee by a voice vote. 

On May 5, 2010, the Committee on Energy and Commerce met 

in open markup session to consider H.R. 3993 as approved by the 

Subcommittee. The Committee agreed to a manager’s amendment 

to the bill by a voice vote. The Committee subsequently ordered 

H.R. 3993 favorably reported to the House, amended, by a voice 

vote. 


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COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list each record vote on the motion 

to report legislation and amendments thereto. There were no 

record votes taken during consideration and passage of H.R. 3993. 

The Committee agreed to a motion by Mr. Waxman to order H.R. 

3993 favorably reported to the House, amended, by a voice vote. 

COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

In compliance with clause 3(c)(1) of rule XIII and clause 2(b)(1) 

of rule X of the Rules of the House of Representatives, the oversight findings and recommendations of the Committee are reflected 

in the descriptive portions of this report, including those regarding 

fraud and deceptive practices in the prepaid calling card market. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

Pursuant to clause 3(c)(2) of rule XIII of the Rules of the House 

of Representatives, the Committee adopts as its own the estimate 

of budget authority and revenues regarding H.R. 3993 prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. The Committee finds 

that H.R. 3993 would result in no new budget authority, entitlement authority, or tax expenditures or revenues. 

STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

In accordance with clause 3(c)(4) of rule XIII of the Rules of the 

House of Representatives, the performance goals and objectives of 

H.R. 3993 are reflected in the descriptive portions of this report, including the need to provide consumers with clear and conspicuous 

information regarding prepaid calling cards. 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee finds that the constitutional authority for H.R. 3993 is provided in Article I, section 8, clauses 3 

and 18 of the Constitution of the United States. 

EARMARKS AND TAX AND TARIFF BENEFITS

H.R. 3993 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9 of rule 

XXI of the Rules of the House of Representatives. 

ADVISORY COMMITTEE STATEMENT

The Committee finds that the legislation does not establish or 

authorize the establishment of an advisory committee within the 

definition of 5 U.S.C. App., section 5(b) of the Federal Advisory 

Committee Act. 

APPLICABILITY OF LAW TO THE LEGISLATIVE BRANCH

Section 102(b)(3) of Public Law 104–1 requires a description of 

the application of this bill to the legislative branch where the bill 

relates to terms and conditions of employment or access to public 


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services and accommodations. H.R. 3993 requires commercial entities that provide or distribute calling cards to disclose the terms, 

conditions, and fees related to the prepaid calling cards. This bill 

does not relate to employment or access to public services and accommodations in the legislative branch. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimates of federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to Section 423 of the Congressional Budget and Impoundment Control Act of 1974 (as amended by section 101(a)(2) of the 

Unfunded Mandates Reform Act, P.L. 104–4). 

COMMITTEE COST ESTIMATE

Pursuant to clause 3(d)(2) of rule XIII of the Rules of the House 

of Representatives, the Committee adopts as its own the cost estimate of H.R. 3993 prepared by the Director of the Congressional 

Budget Office pursuant to section 402 of the Congressional Budget 

Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATE

With respect to the requirements of clause 3(c)(3) of rule XIII of 

the Rules of the House of Representatives, the following is the cost 

estimate on H.R. 3993 provided by the Congressional Budget Office 

pursuant to section 402 of the Congressional Budget Act of 1974: 

JUNE 7, 2010. 

Hon. HENRY A. WAXMAN, 

Chairman, Committee on Energy and Commerce, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 3993, the Calling Card 

Consumer Protection Act. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Susan Willie. 

Sincerely, 

DOUGLAS W. ELMENDORF. 

Enclosure. 

H.R. 3993—Calling Card Consumer Protection Act 

H.R. 3993 would establish new requirements for information that 

must be displayed on prepaid telephone calling cards, on their 

packaging, and in advertisements for the cards. The bill would require the Federal Trade Commission (FTC) to develop regulations 

within one year of enactment that would specify the information to 

be displayed, including the company name, the number of minutes 

available, the dollar amount of the card, and the expiration date. 

Within three years of enactment of H.R. 3993, the FTC and the 

Government Accountability Office would be required to report to 

the Congress on the results of studies on the business practices of 

the calling card industry and the effectiveness of the disclosures required by the bill. 

Based on information from the FTC, CBO estimates that implementing the bill’s requirements would cost about $1 million over 


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the 2011–2015 period, assuming appropriation of the necessary 

amounts, to cover the costs to write and enforce new regulations 

and prepare reports. Enacting H.R. 3993 would not affect direct 

spending or revenues; therefore, pay-as-you-go procedures would 

not apply. 

H.R. 3993 contains intergovernmental and private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA). 

The bill would preempt laws in at least four states that require disclosures to be printed on calling cards. The bill also would impose 

notification requirements and limitations on State Attorneys General, utility commissions, and consumer protection agencies. Because the limits on state authority would not require the expenditure of funds and because the notification requirements would result in minimal additional spending, CBO estimates that the costs 

of the mandates would be small and would not exceed the threshold established in UMRA ($70 million in 2010, adjusted annually 

for inflation). 

By requiring the providers of prepaid calling cards to disclose information about the provider and the terms and conditions of the 

service on each calling card, its packaging, and advertisements, the 

bill would impose a private-sector mandate as defined in UMRA. 

According to industry sources, most providers already adhere to the 

requirements in the bill as part of their standard business practice. 

Further, those sources indicate that the incremental cost to providers that do not meet the standards in the bill would be small. 

Therefore, CBO estimates that the aggregate cost of the mandate 

would fall well below the annual threshold established in UMRA 

for private-sector mandates ($141 million in 2010, adjusted annually for inflation). 

The CBO staff contacts for this estimate are Susan Willie (for 

federal costs), Elizabeth Cove Delisle (for the state and local impact), and Sam Wice (for the private-sector impact). The estimate 

was approved by Theresa Gullo, Deputy Assistant Director for 

Budget Analysis. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

Section 1 provides that the Act may be cited as the ‘‘Calling Card 

Consumer Protection Act’’. 

Section 2. Definitions 

Section 2 contains the definitions that apply to the act. 

Paragraph (1) identifies ‘‘Commission’’ as referring to the Federal 

Trade Commission (FTC). 

Paragraph (2) provides that ‘‘prepaid calling card’’ has the meaning given the term by Federal Communication Commission (FCC) 

regulation (47 C.F.R. 64.5000(a)). The term also includes Voice over 

Internet Protocol (VoIP) and electronic or other mechanisms that 

would allow a user to pay in advance for a specified amount of calling. The term excludes calling cards that are provided to consumers free of charge, prepaid wireless service, and payphone services as defined by the Communications Act of 1934. 

Paragraph (3) incorporates the definition of ‘‘prepaid calling card 

provider’’ as set forth in FCC regulation (47 C.F.R. 64.5000(b)), and 


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also includes providers that utilize VoIP, as well as providers who 

allow their customers to pay in advance for their service electronically or otherwise. 

Paragraph (4) defines ‘‘prepaid calling card distributor’’ as an entity that purchases prepaid calling cards from a prepaid calling 

card provider or other distributor and then sells or resells those 

cards to other distributors or retail sellers. The term excludes any 

retail seller engaged solely in point-of-sale transactions of prepaid 

calling cards and any distributer who merely transports or delivers 

such cards. 

Paragraph (5) defines ‘‘wireless hybrid service’’ as a service that 

integrates both commercial mobile radio service (as defined in FCC 

regulation 47 C.F.R. 20.3) and VoIP service. 

Paragraph (6) defines the term ‘‘VoIP service’’ to have the same 

meaning as the term ‘‘interconnected Voice over Internet Protocol 

service’’ in 47 C.F.R. 9.3. It also includes any voice calling service 

that utilizes VoIP or any successor protocol in the transmission of 

the call. 

Paragraph (7) defines ‘‘fees’’ as referring to all charges, fees, 

taxes, or surcharges applied to a prepaid calling card that either 

are required or expressly permitted by federal, state, or local laws 

and regulations. 

Paragraph (8) defines ‘‘additional charge’’ as any charge assessed 

by a prepaid calling card provider or prepaid calling card distributor on a calling card that is neither a fee nor a rate. 

Paragraph (9) defines the term ‘‘international preferred destination’’ as one or more specific international destinations named either on a prepaid calling card or on the accompanying packaging 

materials. 

Section 3. Required disclosures of prepaid calling cards 

Section 3(a) requires prepaid calling card providers and prepaid 

calling card distributors to accurately disclose certain information 

relating to the terms and conditions of the prepaid calling card. Required disclosures include: the name of and contact information for 

the provider; information about the number of available minutes at 

the time of purchase or the dollar value of the card with the applicable per minute rates at the time of purchase; any applicable fees, 

additional charges, limitations of use, refunds or decreases in card 

value; and expiration dates associated with the use of the prepaid 

calling card. 

Section 3(b) requires that the disclosures must be clear and conspicuous and must be located on the prepaid calling card unless the 

FTC determines otherwise through rulemaking. Section 3(b) also 

requires clear and conspicuous disclosures on Web sites that sell 

calling cards, as well as on advertising and promotional materials 

that contain any representation regarding the card’s dollar value, 

per minute rate, or the number of minutes. In addition, if a language other than English is used on a prepaid calling card, its 

packaging, or certain advertising or promotional materials, the disclosures required under section 3(a) must also be in that language. 

Finally, section 3(b) provides the FTC with the flexibility to require 

shorter disclosures on calling cards and advertisements or other 

promotional materials, but not on Web sites that sell calling cards. 


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Section 3(c) requires that any information provided to consumers 

by way of voice prompts concerning the remaining value of the card 

or the number of minutes available, must be accurate and take into 

account the various fees and charges associated with the card. 

Section 3(d) provides that if the rates change or additional 

charges are imposed when a consumer purchases additional minutes or adds value to a prepaid calling card, such rate changes or 

additional charges shall only apply to the additional minutes being 

purchased. In addition, the new rates or additional charges must 

be clearly and conspicuously disclosed to the consumer before the 

completion of the purchase. 

Section 3(e) prohibits false, misleading, or deceptive representations about the prepaid calling card terms and conditions on any 

calling card, packaging, advertisement, or other promotional material containing a disclosure required by the Act. 

Section 4. Federal Trade Commission authority 

Section 4(a) states that a violation of section 3 shall be treated 

as a violation of a rule defining an unfair or deceptive act or practice under section 18(a)(1)(b) of the FTC Act (15 U.S.C. 

57a(a)(1)(b)). 

Section 4(b) provides the FTC with authority to enforce the Act 

in the same manner and by the same means as though the Act incorporated the FTC Act and with jurisdiction over common carriers 

for purposes of this Act. 

Section 4(c) provides the FTC with the authority to issue regulations pursuant to section 553 of title 5, United States Code. In promulgating regulations under this section, the FTC must take into 

consideration the need for clear disclosures and give due consideration to the views of the FCC and the states. In addition, the FTC 

is provided with the discretion to promulgate rules that prescribe 

requirements concerning the order, format, presentation, and design of disclosures required under this Act, as well as concerning 

the use of a common set of terms, symbols, and categories to describe a prepaid calling card’s fees or charges. The FTC may not, 

however, issue any regulations that otherwise specify the rates, 

terms, and conditions of prepaid calling cards. 

Section 4(d) provides that nothing in the Act is intended to limit 

the authority of the FTC or the FCC. Section 4(d) also states that 

except to the extent expressly provided in the Act, nothing in the 

Act shall be construed to alter or affect the exemption for common 

carriers set forth in the FTC Act. 

Section 4(e) provides that if the FCC should initiate a rulemaking proceeding to establish requirements relating to the terms 

and conditions of prepaid calling cards, the FCC must coordinate 

with the FTC to ensure consistency with the requirements of this 

Act and the regulations issued by the FTC. 

Section 5. State enforcement 

Section 5 gives the states the authority to enforce the provisions 

of this Act. Before bringing an action under the Act, a state must 

provide the FTC with written notice of the action and a copy of the 

complaint, unless the provision of notice is not feasible. In addition, 

the FTC is entitled to intervene in any action brought by a state 

under the Act. 


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Section 6. Application 

Section 6 provides that the requirements of the Act apply to prepaid calling cards that are issued, and advertisements that are disseminated, 180 days after the date on which the FTC issues final 

regulations pursuant to section 4(c) of the Act. 

Section 7. Effect on state laws 

Section 7 preempts state laws that contain requirements regarding disclosures to be printed on prepaid calling cards or packaging 

unless the requirements are identical to the disclosure requirements in this Act. 

Section 8. Studies 

Section 8(a) requires Government Accountability Office to conduct a study on the effectiveness of the Act two years after the 

final regulations are promulgated by the FTC. 

Section 8(b) requires the FTC, in consultation with the FCC, to 

conduct a study of the extent to which the business practices of the 

prepaid calling card industry intended to be addressed by this Act 

exist in the prepaid wireless industry. 

EXPLANATION OF AMENDMENTS

At Subcommittee markup of H.R. 3993, Chairman Rush offered 

a bipartisan manager’s amendment that made several technical 

and substantive changes to the bill. The amendment excluded from 

the definition of ‘‘prepaid calling card distributor’’ certain retail 

merchants and persons who merely engage in the transport or delivery of prepaid calling cards. In addition, the amendment clarified 

that no calling card, packaging, advertisement, or other promotional material containing a disclosure required by the Act shall 

contain any false, misleading, or deceptive representation relating 

to the terms and conditions of the card. The amendment also clarified section 4(c) to ensure that the FTC has adequate rulemaking 

authority to develop disclosures that will protect consumers and 

allow users of prepaid calling cards to comparison shop. Furthermore, the amendment included a limited preemption section similar to the preemption language in the bill as it passed the House 

in the 110th Congress. Finally, the amendment required the FTC, 

in consultation with the FCC, to conduct a study of the prepaid 

wireless industry. 

During the full Committee markup, Chairman Waxman offered 

a manager’s amendment that made one technical change to the 

bill. The bipartisan amendment provides the FTC with flexibility to 

narrow the disclosures required to be placed on advertising and 

other promotional material. The FTC already has this flexibility 

under the bill with respect to prepaid calling cards. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

There are no changes in existing federal law made by the bill, 

as reported. 

Æ 


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