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74–857 2012

H.R. 3993, THE CALLING CARD CONSUMER 

PROTECTION ACT OF 2009 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMERCE, TRADE, 

AND CONSUMER PROTECTION 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

DECEMBER 3, 2009 

Serial No. 111–86 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 


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COMMITTEE ON ENERGY AND COMMERCE 

HENRY A. WAXMAN, California, Chairman 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

RICK BOUCHER, Virginia 

FRANK PALLONE, JR., New Jersey 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

Vice Chairman 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANE HARMAN, California 

TOM ALLEN, Maine 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

CHARLIE MELANCON, Louisiana 

JOHN BARROW, Georgia 

BARON P. HILL, Indiana 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

CHRISTOPHER S. MURPHY, Connecticut 

ZACHARY T. SPACE, Ohio 

JERRY MCNERNEY, California 

BETTY SUTTON, Ohio 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

JOE BARTON, Texas 

Ranking Member 

RALPH M. HALL, Texas 

FRED UPTON, Michigan 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOHN B. SHADEGG, Arizona 

ROY BLUNT, Missouri 

STEVE BUYER, Indiana 

GEORGE RADANOVICH, California 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

(II) 


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(III) 

SUBCOMMITTEE ON COMMERCE, TRADE, AND CONSUMER PROTECTION

BOBBY L. RUSH, Illinois 

Chairman 

JANICE D. SCHAKOWSKY, Illinois 

Vice Chair 

JOHN P. SARBANES, Maryland 

BETTY SUTTON, Ohio 

FRANK PALLONE, JR., New Jersey 

BART GORDON, Tennessee 

BART STUPAK, Michigan 

GENE GREEN, Texas 

CHARLES A. GONZALEZ, Texas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

KATHY CASTOR, Florida 

ZACHARY T. SPACE, Ohio 

BRUCE L. BRALEY, Iowa 

DIANA DEGETTE, Colorado 

JOHN D. DINGELL, Michigan (ex officio) 

CLIFF STEARNS, Florida 

Ranking Member 

RALPH M. HALL, Texas 

ED WHITFIELD, Kentucky 

GEORGE RADANOVICH, California 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

MICHAEL C. BURGESS, Texas 


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C O N T E N T S 

Page 

Hon. Bobby L. Rush, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 1 

Hon. George Radanovich, a Representative in Congress from the State of 

California, opening statement ............................................................................. 2 

Prepared statement .......................................................................................... 5 

Hon. Janice D. Schakowsky, a Representative in Congress from the State 

of Illinois, opening statement .............................................................................. 9 

Hon. Cliff Stearns, a Representative in Congress from the State of Florida, 

opening statement ................................................................................................ 9 

Hon. G.K. Butterfield, a Representative in Congress from the State of North 

Carolina, opening statement ............................................................................... 10 

Hon. Joseph R. Pitts, a Representative in Congress from the Commonwealth 

of Pennsylvania, opening statement ................................................................... 11 

Hon. Ed Whitfield, a Representative in Congress from the Commonwealth 

of Kentucky, opening statement ......................................................................... 12 

Prepared statement .......................................................................................... 13 

Hon. Eliot L. Engel, a Representative in Congress from the State of New 

York, opening statement ...................................................................................... 15 

Hon. John D. Dingell, a Representative in Congress from the State of Michigan, prepared statement ...................................................................................... 97 

Hon. Joe Barton, a Representative in Congress from the State of Texas, 

prepared statement .............................................................................................. 98 

Hon. Phil Gingrey, a Representative in Congress from the State of Georgia, 

prepared statement .............................................................................................. 83 

WITNESSES

Lois Greisman, Director, Division of Marketing Practices, Federal Trade Commission .................................................................................................................. 17 

Prepared statement .......................................................................................... 19 

Answers to submitted questions ...................................................................... 104 

Sally Greenberg, Executive Director, National Consumers League .................... 31 

Prepared statement .......................................................................................... 34 

Patricia Acampora, Commissioner, New York State Public Service Commission, National Association of Regulatory Utility Commissioners ..................... 43 

Prepared statement .......................................................................................... 45 

Answers to submitted questions ...................................................................... 107 

Alie Kabba, Executive Director, United African Organization ............................ 61 

Prepared statement .......................................................................................... 63 

Scott Ramminger, President, American Wholesale Marketers Association ........ 66 

Prepared statement .......................................................................................... 68 

SUBMITTED MATERIAL

Statement of USTelecom Association ..................................................................... 72 

Statement of National Association of Convenience Stores ................................... 79 

Excerpt of Congressional Record, September 25, 2008, submitted by Mr. 

Radanovich ........................................................................................................... 103 


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H.R. 3993, THE CALLING CARD CONSUMER 

PROTECTION ACT OF 2009 

THURSDAY, DECEMBER 3, 2009 

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON COMMERCE, TRADE, 

AND CONSUMER PROTECTION, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:09 a.m., in Room 

2322 of the Rayburn House Office Building, Hon. Bobby Rush 

[Chairman of the Subcommittee] presiding. 

Members present: Representatives Rush, Schakowsky, Sarbanes, 

Butterfield, Space, Engel, Radanovich, Stearns, Whitfield, Pitts, 

Gingrey, and Scalise. 

Staff present: Michelle Ash, Chief Counsel; Tim Robinson, Counsel; Angelle Kwemo, Counsel; Anna Laitin, Counsel; Will Cusey, 

Special Assistant; Sarah Fisher, Special Assistant; Shannon 

Weinberg, Counsel; Brian McCullough, Professional Staff; Will 

Carty, Senior Professional Staff; and Chad Grant, Legislative Analyst. 

OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. RUSH. Good morning. The subcommittee will now come to 

order. 

This hearing is being convened to consider H.R. 3993, the Calling 

Card Consumer Protection Act of 2009, and the Chair wants to 

take a quick moment just to welcome all who are gathered, our witnesses, our—the audience, and also I want to welcome all the members to this hearing. 

And the Chair now recognizes himself for 5 minutes for the purposes of an opening statement. The pre-paid legal calling industry 

generates more than $4 billion in annual revenues. It is a highly 

fragmented industry comprised of well-known and lesser-known 

telecommunications companies that are owned and operated on 

public and private networks, resale of the telecommunications services, and marketing firms and distributors who produce, brand, and 

deliver the cards to retail outlets and stores. 

The Chair wants to take a moment to thank my friend and colleague from New York, Mr. Engel, for reintroducing this bill in the 

House. It would significantly improve the truthfulness of calling 

card advertisements and pave new avenues of recourse for millions 

of defrauded and vulnerable classes of consumers in this country. 


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There is a familiar phrase that has been made infamous by the 

great businessman and showman P.T. Barnum, and he kind of succinctly put us in the proper framework for this time. ‘‘There is a 

sucker born every minute,’’ and these words have helped to set the 

scene for today’s hearing. 

Fraudulent calling cards are in the stream of commerce day by 

day. They misrepresent the amount of the calling minutes that are 

supplied on the calling card and high applicable fees and charges, 

and at times the cards may even provide substandard phone connection, ineffective PIN numbers, and non-functional or alwaysbusy customer service contact information. 

H.R. 3993 would remedy many of these problems. It would require calling card providers and distributors to advertise clearly 

and conspicuously the relevant and applicable information on the 

cards. Such disclosures would include contact information for the 

card service provider, number of minutes applied on the card, and 

dollar value of the card. 

I want to, again, want to greet all the witnesses who are here 

with us today, and I thank them for taking time out of their busy 

schedules to be here, and I look forward to each and every one of 

your insights and to your views on this particular matter of H.R. 

3993. 

And allow me to take particular pleasure today to greet Mr. Alie 

Kabba, who is a witness today. Mr. Kabba is the Executive Director 

of the United African Organization. He has worked devotedly from 

the organization’s Chicago headquarters on behalf of the more than 

100,000 African-American women and children who now make 

their homes in Illinois. Again, I want to thank each and every one 

of you for being here today. 

With that I yield back the balance of my time, and now it is my 

distinct honor to recognize the Ranking Member of the subcommittee, the gentleman from California, Mr. Radanovich, for 5 

minutes. 

OPENING STATEMENT OF HON. GEORGE RADANOVICH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. RADANOVICH. Thank you, Mr. Chairman. I appreciate the 

fact that we are holding this hearing, and last Congress similar 

legislation was ushered through the committee and onto the House 

floor, and only a few short weeks before Congress recessed for the 

term. Doing so reflected our appropriate recognition that fraud and 

deception in the prepaid calling card market does exist and that it 

is necessary to address this problem. 

Intentionally taking advantage of consumers, whether they are 

immigrant groups or our military serving overseas with prepaid 

cards that deliver less service than advertised, is no different than 

stealing. If a consumer purchases a calling card expecting a certain 

amount of minutes, minus the advertised fees, but later finds out 

that hidden fees or expiration of minutes reduce the value of what 

they purchased, this is at very least deceptive and quite possibly 

fraudulent. We certainly would not accept paying for a full tank of 

gasoline but driving away with only half a tank. 


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This is not good for consumers, and it is not good for the legitimate businesses who make and sell these cards. Companies generally are not opposed to many of the requirements in legislation 

as long as they are relevant and adhered to by our competitors. It 

is often the companies that cannot compete on price or service, 

however, that hide the fees or intentionally misrepresent the number of minutes the consumer is actually purchasing. 

This has got to stop. Consumers should have the necessary information to select the card of their choice and are often willing to pay 

more when they are knowing that they are buying a better service. 

The important point is that the consumers are able to choose based 

on available, truthful information. 

H.R. 3993 is intended to provide additional tools to the FDC and 

to the States to prohibit certain practices, require specific disclosures, and enforce violations of the Act. I agree it is important to 

provide meaningful tools to stop abusive or fraudulent practices, 

but given the available time to examine the legislation more thoroughly this year than last year’s end-of-Congress frenetic pace, 

should take the—we should take the appropriate time to move 

through regular order and make necessary changes. As the FTC 

will testify, they have brought a number of cases, and the States 

have brought over 20 cases since the spring of 2008. This legislation could be helpful as a fraud deterrent, but enforcement of existing law will continue regardless of when Congress may enact legislation. 

I have concerns regarding certain provisions of the bill and in 

particular the differences between this version and the one the 

committee considered in the last Congress. Consolidating enforcement at the FTC is good policy given their history of consumer protection and enforcement against unfair, deceptive practices, but to 

be effective it requires a legislative change to the existing common 

carrier exemption under the FCA Act, and without that the vast 

majority of prepaid service providers would remain outside the 

reach of the FTC. 

My concern regarding this provision is whether it effectively consolidates enforcement under the FTC or whether it leaves open the 

unwanted possibility of dual regulation by both the FTC and the 

FCC, and I hope that we can work to clarify this language. 

Additionally and of more concern is to change the permits, the 

States to regulate the same activity as that proposed by this legislation. The States can do—that States can do and enforce their own 

laws in this area. As a policy matter, the change to remove the preemption while enacting a new Federal law is an obvious problem. 

We could respect States’ rights and leave it to them to continue to 

enact and enforce 50 different sets of laws, or we can decide we 

need to have a strong Federal law that provides a uniform and consistent regime that benefits consumers. Doing both will create conflicts and confusion that accompany up to 50 different disclosure 

requirements and will have little corresponding benefit, which is 

why I support the one Federal standard. 

Additionally, there is concern that retail merchants who have no 

direct relationship or control over the disclosures required would be 

subject to this Act. Mr. Engel’s original bill defined distributors 

specifically to not include retail establishments that were engaged 


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only in a point-of-sale transaction. This clarification is no longer in 

the legislation, and I would like to hear the objections and providing—to providing such a protection. I am not aware of other instances where a retailer is liable for the disclosures on a product 

it merely resells as a merchant. 

I would like to thank Mr. Engel for his commitment to this issue, 

and I look forward to discussing and hope to work in a bipartisan 

manner to improve the legislation. Thank you, Mr. Chairman. I 

yield back. 

[The prepared statement of Mr. Radanovich follows:] 


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Mr. RUSH. The Chairman thanks the gentleman. 

The Chair now recognizes the gentleman from Ohio, Mr. Space, 

for 2 minutes for the purpose of an opening statement. 

Mr. SPACE. I will waive my opening statement, Mr. Chairman. 

Thank you. 

Mr. RUSH. The Chair thanks the gentleman. 

The Chair now recognizes the Vice-Chair of the subcommittee, 

Ms. Schakowsky, for 2 minutes. 

OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Ms. SCHAKOWSKY. Thank you, Mr. Chairman. I am very pleased 

to be here today to discuss the Calling Card Consumer Protection 

Act, and I congratulate my colleague, Mr. Engel, for introducing it 

and the Chairman for holding this hearing. 

This bill moved very quickly in the Congress, passing the House 

easily by voice vote. I hope that we can move as quickly this time 

around as—on this important consumer protection bill. Today more 

than 276 million American households and 89 percent of the U.S. 

population have cell phones, but prepaid calling cards remain a 

huge industry, worth $4 billion in 2007. They are particularly popular among college students, as well as military personnel and immigrant communities, people who frequently make international 

calls. 

My district is one of the most diverse in the Nation. Almost onethird of my constituents are foreign born, first generation American 

or first generation American residents. So calling cards are very, 

very important to them. 

Unfortunately, the calling card industry is full of deceptive advertising and hidden fees. The Illinois Attorney General, Lisa Madigan, is currently investigating about a half dozen companies for 

their harmful practices. A card might say it is worth 250 minutes, 

but you could get 200 or 100 once you actually use it or even zero 

minutes. Some cards come with phone numbers that never connect 

or send you to a busy signal. Too often calling cards have no information listed about connection fees, varying rates per minute, a 

charge each week that you don’t know when you use the card, or 

even fees for just hanging up. Such abusive and unfair practices 

must stop. 

I look forward to hearing from our witnesses, whether they believe the Calling Card Consumer Protection Act is sufficient or 

whether we need to go even further. I thank you, Mr. Chairman, 

and I yield back the balance of my time. 

Mr. RUSH. The Chair now recognizes the gentleman from Florida, 

Mr. Stearns, for 2 minutes for the purposes of an opening statement. 

OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA 

Mr. STEARNS. Thank you, Mr. Chairman. While we can see what 

a difference a majority has on the Republicans and Democrats because we all supported the Engel bill. We passed it, I think, by 

voice vote in the last Congress. Wasn’t that right, Mr. Engel? Yes? 


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And now I have to say that as much as I support the intent, I 

am a little concerned, obviously, with the Federal preemption, and 

that is the area that I think many of us on this side are concerned. 

I know that Mr. Barton has also experienced some concern with 

that, too. 

This pre-card calling industry is a billion dollar industry. There 

are some bad actors. Mr. Engel is to be commended for his bill. He 

is simply asking for accurate and reasonable disclosure of the 

terms and conditions of prepaid calling cards. So what could be 

wrong with that? Nothing. 

But let me just give you one of the concerns that I have. Unlike 

the one he introduced in last Congress, the new version of the Calling Card Consumer Protection Act does not, does not, let me repeat, contain Federal preemption. Instead, this bill allows States to 

enact requirements, each and every State, that provide equal or 

greater protection than the Federal standard. 

Given the small size of calling cards and the difficulties involved 

with having to fit lengthy disclosures onto the cards, some in multiple languages, in a clear and conspicuous manner companies may 

not be physically able to comply with both Federal and multipleState disclosure requirements. 

So we have 50 States, you are going to have 50 requirements, 

and you are going to have to reconfigure for each of those States. 

So I think we need one unified set of rules that will apply all players, to all players on notice, really outlining what their responsibilities are to consumers. I think Mr. Engel would probably agree 

with that, and so I think this is a point we can work on together 

in a bipartisan manner to address this issue before we mark up. 

So I would urge the Chairman, Mr. Waxman, and the Ranking 

Member, Mr. Rush, to consider that we have a well-intentioned bill 

that is something that everybody agrees with, but we need to have 

an understanding that in the area of preemption we cannot have 

50 States complying with all these multiple requirements for disclosures on the card and perhaps in multiple languages. 

So with that, Mr. Chairman, I would say that this is a very good 

bill with that one reservation. Thank you. 

Mr. RUSH. The Chair now recognizes the gentleman from North 

Carolina, Mr. Butterfield, for 2 minutes. 

OPENING STATEMENT OF HON. G.K. BUTTERFIELD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH 

CAROLINA 

Mr. BUTTERFIELD. Thank you very much, Mr. Chairman, for 

holding this hearing, and thank you, Mr. Engel, for offering it. It 

is a good bill, and I support it. 

The bill increases the protections for consumers and will go far 

to ensure those who use prepaid calling cards know what they are 

buying and what fees and charges are associated with the use. I 

say all of the time, I represent the fourth poorest district in the 

United States of America, where the unemployment rate is just 

going out of the sky. Many of my constituents, some of the most— 

are the most poorest in the Nation, and prepaid calling cards are 

used often by my constituents to communicate with their families. 

These are the same workers that clean our schools and harvest our 


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food, and they are the same people who are being preyed upon by 

despicable prepaid calling card companies. 

Large calling card companies sell these cards in various minute 

amounts, and what is not clearly disclosed to the consumer is the 

hefty connection or hang-up fees and other fees associated with 

each call. A $20 calling card promising to deliver 100 minutes, for 

example, could ultimately only yield a small percentage of the minutes. In fact, a 2008, study found that of the 45 prepaid cards surveyed, only 60 percent of advertised minutes were actually delivered. These predatory actions force hardworking people into a cycle 

of being victimized by the fraud and deception practiced by the prepaid calling card companies. 

H.R. 3993 provides greater transparency for prepaid calling card 

consumers. It is a good bill. I plan to support it, and thank my 

friend, Mr. Engel, for offering it. 

I yield back. 

Mr. RUSH. The Chair now recognizes the gentleman from Pennsylvania, Mr. Pitts, for 2 minutes. 

OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF PENNSYLVANIA 

Mr. PITTS. Thank you, Mr. Chairman. Thank you for holding this 

hearing on H.R. 3993, the Calling Card Consumer Protection Act 

of 2009. 

Prepaid calling cards are used by scores of people in the United 

States, from college students to people with family and friends 

abroad, to military personnel. American consumers spent roughly 

$4 billion on cards in 2007, however, a number of studies have 

found that there are serious flaws in some of the cards. Many do 

not deliver the full number of advertised minutes. In addition, 

cards sometimes lead to poor phone connections and provide toll 

free and other call-in numbers that are busy or do not work. 

To address these problems last Congress the Energy and Commerce Committee considered H.R. 3402, which passed by voice vote 

on the floor. The bill we are considering today is similar to last 

year’s, but there are a number of concerns with H.R. 3993 that I 

hope we can reconcile. 

Unlike the sent version of this bill, H.R. 3993 does not explicitly 

limit the authority of the FCC, where the FTC has jurisdiction 

under the bill. I believe it would be harmful to place duplicative 

and overly-burdensome regulation on industry by mandating they 

be subject to both the FCC and the FTC. 

Additionally, preemption is essentially eliminated in H.R. 3993. 

The previous legislation only permitted continuation of State laws 

that are identical to the Federal law. Under H.R. 3993 states are 

now allowed to enact requirements that provide equal or greater 

protection than the Federal standard. Finally, not exempting retail 

merchants from the definition of distributor calls into question if 

the retail merchant industry is now liable for the same card disclosures required of the service providers and distributors. 

I hope that many of these concerns can be addressed before we 

move the bill. I look forward to hearing from the witnesses today, 

and I yield back. 


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Mr. RUSH. The Chair now recognizes the gentleman from Maryland, Mr. Sarbanes, for 2 minutes. 

Mr. SARBANES. I waive my opening. 

Mr. RUSH. The Chair thanks the gentleman. 

The Chair now recognizes the gentleman from Kentucky for 2 

minutes. 

OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF KENTUCKY 

Mr. WHITFIELD. Mr. Chairman, thanks very much, and we appreciate your having this hearing on this important legislation. 

The Federal Trade Commission estimates that approximately 

half of the $4 billion of industry revenue from selling these cards 

can be attributed to fraudulent gains, and so I do believe that this 

legislation is a step in the right direction but like some others on 

the committee I have three basic, primary concerns. 

First of all, any industry operating in inter-State commerce I 

think it is imperative that there be Federal preemption, because 

the last thing we want to happen is for a company to have to deal 

with 50 different regulations on a particular card. 

The second thing that I am concerned about in this legislation 

is the possibility of dual regulation between the FCC and the FTC. 

We all know the difficulty with bureaucracies and without a clear, 

definitive understanding of which agency will be responsible, I 

think that is going to be a problem as well. 

And then the third thing that I do have a concern about is that 

the retailers who sell these cards, I think it is imperative that if 

they are knowingly involved in fraudulent activity, then obviously 

they should suffer the consequences, but I think it is very easy for 

retailers to sell these cards and not be aware of the fraudulent activity. And so I think that we should take steps to clarify that and 

make sure that they are not held liable if they are not knowingly 

aware of it. 

But I want to thank the Chairman for his continued leadership 

in this effort and for the Ranking Member as well, and I yield back 

my 9 seconds. 

[The prepared statement of Mr. Whitfield follows:] 


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Mr. RUSH. The Chair thanks the gentleman. 

Now, seeing that there are no other witnesses, no other members 

who need to be recognized for opening statements, the Chairman 

now requests unanimous consent that the author of the bill, Mr. 

Engel, be allowed to sit in on the committee hearing and participate in the committee hearing, and he will be able to ask questions 

at the conclusion of the questions by the members of the committee. 

Hearing no objections, so ordered. 

And the Chair now recognizes for 5 minutes the author of the 

legislation, Mr. Engel. 

OPENING STATEMENT OF HON. ELIOT L. ENGEL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW 

YORK 

Mr. ENGEL. Well, thank you very much, Mr. Chairman. I want 

to thank you for holding today’s hearing on my legislation, H.R. 

3993, the Calling Card Consumer Protection Act, and for allowing 

me to participate as a member of the Energy and Commerce Committee but not a member of this subcommittee. I would also like 

to welcome Commissioner Acampora from my home State of New 

York for attending this hearing as well. 

And I appreciate the comments made by all of my colleagues in 

support of the bill, even though some may have some questions 

about certain parts of it. As many of us know, calling cards are an 

invaluable resource for people who don’t have long distance telephone service in their home or those who make frequent overseas 

calls. Calling cards that provide the services the companies advertise can save consumers a great deal of money when they call 

home, but unfortunately as members have said, as we are seeing 

over and over again, many companies fail to keep their advertised 

terms. 

About 3 years ago I began hearing from a number of constituents 

regarding their prepaid calling cards. They were contacting me because their calling cards failed to provide the number of minutes 

that were advertised. In fact, many were not even close to delivering the promised number of minutes. 

In independent tests calling cards were shown to provide far 

fewer minutes than were advertised. One study found that on average the caller only received 60 percent of the minutes guaranteed 

by the card. I recently read that the prepaid calling card industry 

takes in $4 billion a year in revenue. If the cards are only providing 60 percent of the minutes, we can all do the math. This deception is costing consumers and honest companies hundreds of 

millions of dollars a year. 

Calling card fraud harms segments of the population, as my colleagues have pointed out, who are among the most vulnerable to 

being victimized by unscrupulous companies, only seeking to make 

a quick profit. These companies are known to target poor, minority, 

and immigrant populations, and they don’t stop there. Even our 

soldiers in Iraq and Afghanistan have been preyed upon by deceptive practices of calling card companies. 

My legislation will put a stop to these practices. It would also 

provide that the government is able to enforce the legislation to try 


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to get rid of the dishonest companies. Calling cards are an extremely useful product for consumers, and I don’t want to see honest companies punished. There is absolutely no reason why a company cannot deliver what is promised and still turn an honest profit. If consumers know that the card they purchased will provide the 

full amount of calling time that is advertised, this will benefit both 

consumers and the marketplace. 

And let me just say I think that industry here should support 

this bill, not get bogged down with ridiculous reasons for opposing 

it. I commend those segments of the industry that are working 

with us, but the ones that are dragging their feet, if they have 

nothing to hide, if their calling cards are not fraudulent, then they 

should enthusiastically support this legislation. 

And I want to thank Senator Nelson of Florida, who is sponsoring this bill in the Senate, as well. I would strongly encourage 

the members of the committee, of the subcommittee, to support 

H.R. 3993. 

I will show flexibility in working with members to see if we can 

all come to a conclusion, but we don’t want to water down the bill 

so much that it becomes ineffective. So I think that is the counter 

to what some of my colleagues have pointed out, but I do appreciate the bipartisan support for this bill, and I strongly urge members of the committee to support it, and I thank you, again, Mr. 

Chairman, for holding this hearing today and allowing me to participate as a subcommittee member, and I yield back the balance 

of my time. 

Mr. RUSH. The Chair thanks the gentleman. 

Now it is my distinct honor and privilege to welcome our witnesses for today’s hearing. Beginning on my left we have with us 

Ms. Lois Greisman. I think I am pronouncing that right. Ms. 

Greisman is the Director of the Division of Marketing Practices for 

the Federal Trade Commission. Next to Ms. Greisman is Ms. Sally 

Greenberg, who is the Executive Director of the National Consumers League. 

And next to Ms. Greenberg is Ms. Patricia Acampora. She is the 

Commissioner of the New York State Public Service Commission, 

and she is a member of the National Association for Regulatory 

Utility Commissioners. Did I get that right? And next to Ms. 

Acampora is Mr. Alie Kabba. He is the Executive Director of the 

United African Organization, and then lastly but not least Mr. 

Scott Ramminger, who is the President of the American Wholesale 

Marketers Association. 

The Chair wants to thank each and every one of you for appearing before this hearing, and it is the practice of this subcommittee 

to swear in the witnesses, and I will ask if you would stand and 

raise your right hand. 

[Witnesses sworn.] 

Mr. RUSH. Please let the record reflect that all the witnesses 

have answered in the affirmative. 

And now it is—the Chair recognizes Ms. Greisman for 5 minutes 

for the purposes of opening statements. 


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TESTIMONY OF LOIS GREISMAN, DIRECTOR, DIVISION OF 

MARKETING PRACTICES, FEDERAL TRADE COMMISSION; 

SALLY GREENBERG, EXECUTIVE DIRECTOR, NATIONAL CONSUMERS LEAGUE; PATRICIA ACAMPORA, COMMISSIONER, 

NEW YORK STATE PUBLIC SERVICE COMMISSION, NATIONAL 

ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS; 

ALIE KABBA, EXECUTIVE DIRECTOR, UNITED AFRICAN ORGANIZATION; AND SCOTT RAMMINGER, PRESIDENT, AMERICAN WHOLESALE MARKETERS ASSOCIATION 

TESTIMONY OF LOIS GREISMAN 

Ms. GREISMAN. Thank you very much. Good morning, Chairman 

Rush, Ranking Member Radanovich, members of the subcommittee. 

I am Lois Greisman. I am the Associate Director of the FTC’s Division of Marketing Practices, and I am very pleased to appear before 

you today. 

As you know, the FTC’s formal views are presented in its written 

testimony. My oral remarks and any answers to questions you may 

have reflect my own views and not those of the Commission or any 

individual commissioner. 

I would like to take my time to update you on the FTC’s prepaid 

phone card initiatives and to discuss the Commission’s support for 

H.R. 3993. 

One need look only at the enlarged poster to your left, which was 

produced by defendants in one of the actions that the FTC brought, 

to see how problematic disclosures are in this industry. As is typical, the poster makes large, bold claims about the number of calling card—of calling minutes consumers purportedly will receive in 

calls to specific destinations. 

For example, this poster boasts that consumers will receive 124 

minutes to the Dominican Republic, 60 minutes to El Salvador. In 

fact, the FTC’s testing showed that the card advertised here delivered on average only about half the advertised minutes. Now, that 

the card failed to deliver was due in no small part to an array of 

hefty hidden fees. Buried at the bottom of the poster in fine print 

that even if I were directly in front of it I would be strained to be 

able to read, are lines of very small print that is so small and wording so vague as to be nearly incomprehensible. 

So if an advertisement says that a card will provide 200 minutes 

of calling time to a particular country, it should do just that. Providing 100 minutes or less is unacceptable and indeed, it is illegal. 

Similarly, hidden, incomprehensible connection, disconnection, 

maintenance, and other fees or charges are illegal. 

Last year the Commission testified on the earlier version of H.R. 

3993. Since then the Commission has continued to scrutinize the 

prepaid calling card industry while working very closely with its 35 

State partners and the FCC through the Federal State Task Force 

the Commission created back in 2007. As you have all noted, users 

of prepaid phone cards, whether recent immigrants, members of 

the Armed Services, students, or any one of us sitting here, are entitled to receive what they pay for. 

Several States, most notably Florida, Illinois, New Jersey, Texas, 

and California, have been particularly active in this area, investigating or filing many actions against both distributors and carVerDate Mar 15 2010 02:04 Oct 20, 2012 Jkt 074857 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 E:\HR\OC\A857.XXX A857

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riers to ensure that the marketing of prepaid phone cards is truthful and accurate. And at the same time the FTC has continued its 

law enforcement efforts, targeting prepaid phone card distributors, 

reaching settlements in two cases with nearly $3.5 million in monetary relief and strong injunctive relief, and just this past July the 

Commission sued another major distributor, Diamond Phone Card 

and its principles, making similar allegations as in the other cases. 

Now, as always, complementing the FTC’s law enforcement efforts is a targeted consumer education campaign in both English 

and Spanish to ensure that purchasers of prepaid phone cards 

know what the cards are supposed to do and know what to look for 

when making a purchase. 

Turning now to the bill. H.R. 3993 is designed to provide accurate and improved disclosures and further provide the Commission 

with civil penalty authority and create the mechanism for States 

to enforce the law. It also would provide a strong set of tools to 

combat fraud in the prepaid phone card industry. Critically, the 

legislation creates a carve-out to the common carrier exemption 

that would allow the Commission to sue phone card providers, 

namely carriers, and obtain civil penalties and other relief against 

them. Eliminating this common carrier exemption for these purposes will permit the FTC to target the critical segment of the industry that in many cases, no doubt, bears liability for the widespread fraud in this industry. 

Indeed as I have already mentioned, many of the State actions 

have targeted carriers, but—and at the risk of sounding ungrateful, 

the bill’s exemption for certain prepaid wireless phone services is 

problematic. It creates a welcome sign for the worst actors in the 

industry, inviting them to migrate their business to prepaid wireless products. The nature of the wireless products and services, as 

well as the advertising and marketing for them, is strikingly similar to those outside of the wireless context. The same rules of the 

road should apply. 

Thus, taking prepaid wireless services out of the bill’s regulatory 

coverage does not seem sensible and creates a strong incentive for 

mischief. I urge the subcommittee to reconsider this point. 

I very much look forward to working with the subcommittee and 

to answering any questions you may have. Thank you. 

[The prepared statement of Ms. Greisman follows:] 


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Mr. RUSH. Thank you very much. 

The Chair now recognizes Ms. Greenberg for 5 minutes for the 

purposes of opening statement. 

TESTIMONY OF SALLY GREENBERG 

Ms. GREENBERG. Thank you very much, Chairman Rush and 

Ranking Member Radanovich. Good morning. My name is Sally 

Greenberg. I am Executive Director of the National Consumers 

League. 

The National Consumers League was founded in 1899, which 

makes us the oldest consumer organization in the United States. 

As part of our longstanding interest in protecting consumers from 

fraudulent practices, we operate a fraud center where we accept 

complaints and educate consumers directly about fraudulent practices. Last year we processed nearly 20,000 complaints. Included in 

those complaints were concerns that consumers had about prepaid 

calling cards. 

When we appeared last before this committee in September of 

2008, we equated the prepaid calling card marketplace with the 

wild west. A little over a year later we are sad to say that the situation for consumers remains more Gunsmoke than Little House on 

the Prairie. We believe that H.R. 3993 will help protect consumers 

from fraud by strengthening disclosure requirements in these 

cards. 

While we would have liked to have seen outright prohibitions on 

a number of the most egregious business practices, including high 

billing increments, pricy connection fees, and finding mandatory arbitration clauses, we are heartened that the bill explicitly protects 

the rights of States to develop strong consumer protections. 

The rapid growth in the prepaid calling card industry, which is expected to bring in somewhere between $2 and $4 billion in annual revenues by 2012, coupled with loose regulation and often 

lacks enforcement, has enabled consumer fraud to flourish. While 

these cards provide users with an alternative means of calling 

friends and family, many card providers employ false and deceptive 

practices and impose unconscionable terms. 

Part of the problem we believe is the ease with which con artists 

can enter the industry. According to Pablo Bressan, a Miami-based 

telecom consultant and prepaid calling card distributor, it costs as 

little as $20,000 to buy the long distance minutes and backend consumer platforms to get into—computer platforms to get into the 

business. Some companies do not even go that far. They simply resell the cards made by others. 

The potential for fraud in the prepaid calling card industry is so 

well known it even merited a mention as a preferred scheme on 

HBO’s ‘‘The Sopranos,’’ with Tony Soprano calling the scheme he 

was running, ‘‘blankety blank beautiful because it is so easy to run 

the scam.’’ Fraud is fraud. If a car is sold with the promise of a 

sunroof and chrome wheels, it better have a sunroof and chrome 

wheels, and if a phone card promises 500 minutes to El Salvador, 

it should deliver those 500 minutes. 

The ultimate victims of fraud and deception in the prepaid calling card market are the most vulnerable consumers; immigrants, 

working poor, military families, and those with lower incomes. By 


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some estimates Hispanic consumers alone may have been losing $1 

million per day because of the fraudulent phone cards. Independent 

analysis by the Hispanic Institute and the FTC found that the average calling card only delivered between—cards only delivered between 50 and 67 percent of the minutes advertised. The cost per 

minute rates for prepaid phone cards can be up to 87 percent higher than expected, and an expected call rate of 15 cents per minute, 

for example, may end up costing 28 cents per minute. 

Now, some attorneys general had done a commendable job in 

prosecuting fraudulent practices, including in Florida and Texas. 

The Federal Trade Commission has also conducted investigations 

as Ms. Greisman has pointed out and has worked very closely with 

the States, and we commend them for that. While the FTC and 

State actions in this area have certainly benefited consumers, we 

feel that—we fear that millions of dollars in losses continue to flow 

into the pockets of scammers. And also that calling card fraud too 

often goes under-reported or unreported, and that is why we need 

basic federal protections to stem the tide of the many deceptive 

practices in the industry. 

NCL believes that giving the FTC greater authority as called for 

in H.R. 3993 would help to level the playing field for providers. As 

called for in the bill, the regulations should also include requirements that providers and distributors disclose the terms and the 

conditions of the cards and list the per-minute rates, preferred 

international designation rates, and any fees or surcharges. In 

short, we believe consumers should know what they are buying, 

what—they get what they paid for, and have an accessible avenue 

for redress if they are harmed. 

We want to add some recommendations onto what is already 

available in H.R. 3993. First with regard to disclosure, we recommend that this section of the bill be expanded to include a requirement that every calling card provider publish a Web site listing the cards’ rates, taxes, fees, and surcharges. Currently Section 

3A of H.R. 3993 only requires that providers list rates if they maintain a Web site. 

Secondly, if the GAO study mandated in Section 8 of the bill presents evidence indicating that greater disclosure has not curbed the 

abuses, we recommend further action be considered by this committee. And specifically, we would like the committee to consider 

requiring—one, requiring all credit card providers to be licensed 

and post a bond before marketing cards to consumers. Such a move 

would address the issue of the extreme ease of entry into the industry, which invites fraudsters. 

Secondly, we would like to require all providers to—we think 

there ought to be a requirement that providers have a 24-hour, 7- 

day-a-week toll-free consumer line staffed by live representatives 

that are fluent in the language the card is marketed in. 

Third, we would like to see a provision requiring sellers to inform 

consumers via Web site or toll-free phone number of any proposed 

changes in terms and conditions with the consumers given a 

chance to reject those changes and receive a refund without a fee. 

Fourth, we would like to see a requirement for uniform terms in 

all prepaid calling card contracts so the consumers can more easily 

comparison shop, and finally, we would like to see a prohibition on 


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binding mandatory arbitration and preserving a private right of action. 

Thank you, Mr. Chairman. We look forward to answering any 

questions and working with the committee to see this legislation 

enacted. 

[The prepared statement of Ms. Greenberg follows:] 


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Mr. RUSH. The Chair thanks Ms. Greenburg. 

And now the Chair recognizes Ms. Acampora for 5 minutes for 

opening statements. 

TESTIMONY OF PATRICIA ACAMPORA 

Ms. ACAMPORA. Thank you, Chairman Rush, Ranking Member 

Radanovich, Mr. Engel, and members of the committee. My name 

is Patricia Acampora. I am Commissioner with the New York State 

Public Service Commission. I am testifying today for the National 

Association of Regulatory Utility Commissioners or NARUC. 

NARUC represents the agencies in each of your States that have 

oversight responsibilities for telecommunications. These commissioners are, like you, all focused on what is best for your State and 

your constituents. On behalf of NARUC I want to commend Chairman Rush, Ranking Member Radanovich, and Mr. Engel, my fellow 

New Yorker, for their leadership on this important issue. We want 

to specifically thank each of you, in particular, your excellent staffers, Britt McArrid and Anna Laitin. 

I have submitted written testimony, but in my oral remarks I 

will briefly touch on why this is a good bill and then provide a few 

suggested improvements. 

H.R. 3993 is a good bill. Abuse in the prepaid calling card market is well documented. By definition the fraud and inadequate disclosure problems targeted cannot be handled by market forces. 

That is why reputable providers that make up the heart of this industry should embrace the joint Federal, State enforcement regime 

presented. 

The State—the Federal, State partnership established in Sections 5 and 7 of the bill is critical. It maximizes the avenues for 

consumer redress. It assures States don’t waste tax dollars reshuffling existing enforcement regimes. It allows more protective State 

fines and remedies to remain intact. It leverages State and Federal 

enforcement activity to produce the greatest possible deterrents to 

bad actors. There is never a good reason to take State consumer 

cops off the beat or to limit your constituents’ avenues for redress. 

H.R. 3993 does neither. 

Significantly, the bill also mandates disclosure of all information 

that consumers need to make informed decisions and also Federal 

and State authorities need to investigate bad actors. This legislation is, in fact, an excellent template for how Federal and State authorities can best partner to protect consumers. This is a good bill, 

and NARUC supports it. 

That said, I do have a couple of personal suggestions and one 

NARUC proposal to further improve what is already a very good 

bill. 

NARUC suggests changing the definition of prepaid calling card 

and calling card service. The current definitions reference existing 

regulatory classifications that are increasingly outdated as technology evolves. Definitions that reference specific technology is like 

void, and old classifications can only serve as target for bad actors 

to find loopholes, something history has conclusively demonstrated 

they are very, very good at. 

The subcommittee should focus on a functional definition that is 

not tied to any particular technology like the one used in Senate 


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companion bill S.562. That approach was also used by Representative Engel in H.R. 1258. 

I also have a couple of personal recommendations. My Commission and others have difficulty pursuing prepaid calling card complaints because the rates and fees information related to the card 

is printed on the packaging, which is normally thrown away. I 

would like to commend Congressman Engel as this bill fills the gap 

by requiring that disclosure of rates and fees, as well as contact information, be printed on the calling card itself, not just the packaging. 

Further, if the disclosure printed on the card is obscured by the 

packaging, this legislation requires the disclosure also be printed 

on the packaging. However, I remain concerned that providing full 

disclosure on the calling card itself may result in unreadable print 

size. To improve the readability, I suggest service providers be required to include all rates and fees on a piece of cardstock included 

with the calling card. This card should be the same size as the calling card and have the phrase, consumer, do not discard, printed on 

both sides in large type. 

Another personal recommendation would be to require all calling 

card providers to maintain a Web site with information on the 

rates, terms, and conditions of the card and the Web site to be displayed on the card. As currently drafted, the bill only requires online disclosure if a provider maintains a Web site. This opens the 

door to abuse. It is not unreasonable to require a provider to maintain a Web site outlining rates, terms, and conditions. It is certainly not expensive nor difficult. 

Thank you again for allowing me to have this opportunity to testify. 

[The prepared statement of Ms. Acampora follows:] 


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Mr. RUSH. The Chair thanks Ms. Acampora. 

Now the Chair recognizes Mr. Kabba for 5 minutes for the purposes of opening statement. 

TESTIMONY OF ALIE KABBA 

Mr. KABBA. Mr. Chairman and the subcommittee, I am Alie 

Kabba, Executive Director of the United African Organization and 

the Vice President of the Illinois Coalition for Immigrant and Refuge Rights. Thank you very much for the opportunity to share my 

perspectives on prepaid telephone cards. This hearing is very timely. 

The United African Organization and the Illinois Coalition for 

Immigrant and Refuge Rights recognized that prepaid phone cards 

are often the only means for immigrants from Africa, Asia, Latin 

America, and the Caribbean to stay in touch with family members 

abroad. The cards are generally marketed through ethnic stores in 

neighborhoods with significant immigrant populations. They are 

easily accessible and on the surface cheap compared to rates by 

major providers. However, appearances are often deceiving, particularly for consumers with limited English proficiency. 

Prepaid phone cards too often do not provide the actual minutes 

advertised or announced due to a myriad of fees. Limited Englishproficient consumers, including immigrants, refuges, and the low 

income, are faced with unnecessarily small, fine print to decipher 

as usage fees. By all accounts prepaid phone cards are predominantly used by some immigrants who can’t qualify for phone service from major providers like AT&T and Verizon because they lack 

needed documentation or they do not have credit history. 

Alas, Mr. Chairman, this vulnerable group of undocumented consumers of prepaid phone cards is the least likely to complain about 

poor customer status, deceptive practices, or deficiencies as the 

user of the cards. Fees may not always be fully disclosed, and even 

if they are disclosed, they usually are not understood. When you 

factor in the problem with low-completion rate of calls, hidden fees 

can easily account for a hefty portion of the cost per call. 

Short expiration dates have become a practice, presumably to increase calling card sales. Unsuspecting consumers are out of minutes if they hold onto the card beyond the short expiration dates. 

Immigrant customers are likely to buy a few extra cards in case of 

a family emergency in faraway places like the Democratic Republic 

of Congo or Trinidad and Tobago. The short expiration dates often 

leave customers with worthless cards due to no fault of their own. 

Short expiration dates are sometimes related to yet another hidden problem with prepaid phone cards. Some calls do not simply 

reach their destinations. An unsuspecting customer may try repeatedly over an extended period of time to reach their loved ones in 

say Bolivia or Liberia without giving much attention to the expiration dates. Consequently, they are hit with a double whammy of 

losing their money and not being able to talk to their loved ones 

abroad. 

Cost-per-minute rates are up to higher than those advertised. 

The joke in the community is that it does not matter whether the 

prepaid phone card is marketed under the brand name of African 

Safari, African Kilimanjaro, or African Sky. The actual cost per 


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minute is as mysterious as the night sky over the Sahara Desert. 

In other words, prepaid calling cards are like books whose covers 

tell you nothing about their context. You simply hope and pray to 

the Holy Spirit that you have your money’s worth. 

And to add insult to injury, Mr. Chairman, customers have no recourse to lodge their complaints. Even in the rare instance is where 

you can reach a customer service department, customer service personnel may not be available or their customer service department 

speak the language of the customers. Since a significant percentage 

of their customers consist of limited English proficient households, 

with at least one relative aboard, it flies in the face of logic that 

many prepaid phone card provides do not have customer service departments or departments with linguistically-competent staff. This 

lack of commitment to customers, customer needs implies a cynical 

business strategy, relying on the captive customers who will accept 

cutthroat rates and poor service because they have no viable alternatives. 

There is the perennial complaint about billing increments, the 

units the companies use to deduct minutes. For example, if using 

one bill increment on a5-cent-per-minute card, they deduct 5 cents 

for the call even if the call lasts for 1 minute or just 30 seconds. 

If the card applies a 5 billing increment, that same 30-second call 

could cost 25 cents. Clearly, the customer ends up with fewer minutes than previously advertised. 

It is crystal clear that the empirical basis of the above consumer 

complaints point to one conclusion. Information provided by prepaid phone card issuers is often confusing, incomplete, and deceptive. 

In conclusion, in requiring accurate and reasonable disclosure of 

the terms and conditions of prepaid telephone calling cards and 

services, we strongly believe that H.R. 3993 addresses all pertinent 

consume complaints in our diverse immigrant and low-income communities. 

Furthermore, we believe that careful wording of what is meant 

by fruitful disclosure of minutes available is imperative if per call 

and periodic fees are allowed. If fees are allowed, there must be 

standardization of terms and only one term for each fee. Consumers shall have better information prior to purchase. Prepaid 

phone card providers can facilitate this process by using simple, 

plain English. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Kabba follows:] 


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Mr. RUSH. The Chair thanks the gentleman. 

The Chair now recognizes for 5 minutes Mr. Ramminger for the 

purpose of opening statement. 

TESTIMONY OF SCOTT RAMMINGER 

Mr. RAMMINGER. Thank you, Mr. Chairman. I am Scott 

Ramminger, President of American Wholesale Marketers Association. Our association represents distributors to convenience stores 

across the country. Our members supply about $85 billion worth of 

product through convenience stores like 7–11, for example. 

Simply put, they purchase products from manufacturers, they 

purchase snacks and candy and tobacco products from the manufacturers, they aggregate that product and deliver it and sell it to 

the convenience stores, and of course, one of the things that they 

do along with the consumable products is supply some of these prepaid calling cards, which they purchase from the manufacturers of 

those cards. 

On behalf of AWMA I would like to thank the subcommittee for 

holding the hearing and for working to ensure that consumers are 

protected from unfair and deceptive practices with respect to these 

cards. We support that goal wholeheartedly, however, we would 

like to urge that any legislation ultimately approved by the committee include language that imposes liability for false labeling or 

advertising on our member distributors only if they know about 

this falsity. Unfortunately, the legislation currently before the committee contains no such provision providing this necessary protection for law-abiding distributors. 

Under the current legislation H.R. 993, a distributor, much like 

a retailer, would be held liable and could be punished simply by 

acting as a conduit, purchasing these cards from the manufacturer 

and supplying them to the convenience stores, even if the distributor was completely unaware that there was any sort of discrepancy or problem with the cards. 

This would create an unfair burden of liability for the distributors, and I want to urge the committee to ensure that the legislation promoting the consumer protection on the prepaid calling 

cards includes protection for the law-abiding distributors who unwittingly could be acting as go-betweens on these products. 

The H.R. 993 would add the subject of calling cards to the Federal Trade Commission Act, directs the FTC to write a rule governing calling cards, and spells out the consumer disclosures that 

calling card vendors must provide. The penalties for violation of the 

FTC rules or injunctions, money damages, and fines. The bill gives 

States Attorney Generals similar authority. We believe that it is 

only fair that wholesale distributors are exempt from liability for 

incorrect disclosure if the distributor has no control over the scope 

or services that the manufacturer has delivered. 

While it is true that a distributor could tell whether or not there 

was a clear and conspicuous notice on the card about fees and minutes, the distributor would have no way of knowing whether, in 

fact, the card had the correct number of minutes on it or not. 

In previous Congress a similar bill on this issue, H 3402, addressed the problem by making it unlawful for the distributor to 

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phone card provides fewer minutes than the number promoted or 

advertised. As I said, unfortunately, this new bill does not have 

this much-needed provision. 

On behalf of all members of the American Wholesale Marketers 

Association, I would like to offer the following fix aimed at ensuring the fairness and reasonableness of the measure. 

Section 2(4) defines prepaid calling card distributor. This section 

could be amended by adding the following clause at the end. But 

such termed as not include distributors who sell such cards in the 

same form and packaging as acquired from a prepaid calling card 

service provider or distributor. 

Alternatively, a provision could be added to the directions given 

to the FTC that would read, in promulgating each such regulation, 

the Commission shall not issue regulations which hold the prepaid 

calling card distributor liable for deceptive disclosure of services or 

rates which the distributor was unable to know or control. 

And just—I would just like to add, I think there is some—a little 

bit of nomenclature problem perhaps, because sometimes our members who are real wholesale distributors who are purchasing typically goods, you know, canned goods or candy from a manufacturer 

and reselling it, we refer to as distributors. But—and sometimes 

the makers of these cards are referred to as distributors. That is— 

we are talking about two different sorts of distributors entirely. 

Our guys are not buying the minutes and producing the cards. 

They are buying the cards from someone and simply selling them 

along with other goods to the retailer. 

I would again like to commend the subcommittee for these efforts. It is clearly an important issue. I represent small businesses, 

and I clearly can appreciate this significant problem, and I hope 

you will consider our concerns as you go forward on this important 

issue. Thank you, Mr. Chairman. 

[The prepared statement of Mr. Ramminger follows:] 


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Mr. RUSH. The Chair thanks you, and the Chair thanks all of the 

witnesses for their fine opening statements. 

Before we begin our line of questioning, I request unanimous 

consent—I am requesting the submission of two items that were 

submitted to the subcommittee for entry into the record of today’s 

hearing. Item number one is a statement for the record of Mr. Walter B. McCormick Jr. He is the President and CEO of the U.S. 

Telecom Association, and the second item is the statement and the 

comments of Mr. John Eichberger. He is the Vice President of the 

National Association of Convenience Stores. 

Hearing no objection so ordered. 

[The prepared statement of Mr. McCormick follows:] 


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[The prepared statement of Mr. Eichberger follows:] 


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Mr. RUSH. The Chair—— 

Dr. GINGREY. Mr. Chairman. 

Mr. RUSH [continuing]. Recognizes himself now for 5 minutes. 

Dr. GINGREY. Mr. Chairman, could I ask unanimous consent to 

submit my opening statement for the record? 

[The prepared statement of Dr. Gingrey follows:] 


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Mr. RUSH. Hearing no objections, so ordered. 

The Chair recognizes himself for 5 minutes, and the Chair directs this question to Ms. Greisman. 

Ms. Greisman, this legislation provides the FCC with the authority over common carriers solely for the purpose of enforcing the 

provisions of the bill. Although the FCC is generally prohibited 

from exercising any authority over common carriers, precedence on 

this kind of carve-out authority as a similar problem with giving 

it to the FCC regarding pay-per-call services. 

The question that I ask of you is what could the FCC do differently if it had this special carve-out authority regarding these 

calling cards? 

Ms. GREISMAN. Mr. Chairman, the answer is very simple. It 

could sue carriers, which it cannot currently do. The three cases 

brought by the FDC have been against prepaid phone card distributors. We do not have the statutory authority currently to sue 

the carriers, many of whom we believe are also responsible and 

should be held liable for the fraudulent claims that were made. 

Mr. RUSH. In your testimony you argued for a complete repeal 

of the common carrier exemption. Why do you believe that this is 

necessary? 

Ms. GREISMAN. We think that exemption is outdated. The telecommunications industry today looks incredibly different from how 

it looked back in the early ’90s. We see convergence among telecommunications and internet service providers, and we simply 

think it does not make sense and it actually impedes our law enforcement activities as it has in the prepaid calling card context, 

and it complicates litigation which we have seen in cases where we 

have brought involving cramming, which is the unauthorized placement of charges on telephones, telephone bills. 

Mr. RUSH. Are there any other witnesses who have either similar 

or contrary comments or answers to this question? Are there any 

other witnesses who would like to comment on Ms. Greisman’s response to the question? 

Ms. GREENBERG. Mr. Chairman, we—in our testimony we support the carve-out for the specific purposes of allowing the FDC to 

have jurisdiction over the common carriers in this situation because they play a big role in servicing the consumers who buy 

these cards. So, yes, we do support the FDC’s role in this area. 

Mr. RUSH. Anyone else? Any other comments? 

I am going to move to another line of questioning here. Mr. 

Kabba, for many immigrants living in the U.S., and you clearly 

stated it, but I want to you to state it again, but it is not only immigrants. We got college students and military personnel, and the 

prepaid calling card is a primary method for staying in touch with 

families and friends. But has been stated earlier, prepaid calling 

cards in most instances or in many instances fails to deliver the 

full number of advertised minutes. 

For example, in 2007, the Hispanic Institute conducted a study 

and concluded that on average of prepaid calling cards 60 percent 

of the minutes that were advertised, and this is totally unacceptable. In what remaining time I have a want to explore, dig into the 

impact these fraudulent calling cards can have on American consumers. You represent immigrants in Chicago. What impact do 


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these fraudulent cards have on the many immigrants that you help 

on a daily basis? 

Mr. KABBA. Clearly if you look at the deceptive practices, what 

we see on a daily basis in our communities is that they are generally low-income households, hence you lose more money than the 

service that gets returned, and I think that this is important, you 

know, because these are the households that really need to divert 

significant portions of their household income to basic necessities, 

you know, food, making sure that it can pay the rent and not be 

homeless, to pay for childcare, you know, for their children, or they 

need actually to have a place before they can go to work. 

And so when we look at the complaints that we receive every 

time, Mr. Chairman, it is clear that there is, indeed, an outflow of 

income from these households to businesses that are clearly not 

providing the services that they purport to provide for the community. 

And more importantly I think that it sends the message that, in 

our communities at least, that there is no recourse for these households to turn to in terms of their legitimate complaints, and this, 

I think, bill helps us to deal with that problem, because there is 

a way for them to call a place. Even a toll-free number, you know, 

that is dedicated to customer complaints that we can direct them 

to. That will be far more empowering and help them to know that 

they are not vulnerable to these predators, because that is really 

what the practice is. 

Each card comes in different names, and you attempt to buy the 

cards that perhaps is restricted to your homeland, you know, if you 

are from Trinidad and Tobago, you see a card that talks about 

some Trinidadian music, and you think, oh, that is great. Calypso 

and you buy it, but then it is really the same thing as African Kilimanjaro, you know, but it is targeted towards these households 

that are not able to really react to the deceptive practices that we 

have documented. 

And these documentations, in fact, have been highlighted in the 

University of Chicago study of 2004, which clearly supports many 

of the statements that you have made here, that people who buy 

phone cards generally do not get their money’s worth. And so we 

are really talking about a community that is significantly losing 

money and not getting the services, and I think this bill will help 

stop that bleeding from their households. 

Mr. RUSH. The Chairman’s time is up. 

The Chair now recognizes the Ranking Member, Mr. Radanovich, 

for 5 minutes. 

Mr. RADANOVICH. Thank you, Chairman Rush. Welcome to the 

subcommittee, and we appreciate all of your testimony. 

Ms. Greisman, if I may, I would like to quiz you on one particular item, and that is the retail end of this concern in legislation. 

During the floor debate last year the gentleman from New York, 

Mr. Engel, the author of the bill, stated very clearly that he believes that the intent of the legislation, at least last year’s legislation, was to address the bad actors manufacturing these cards and 

not go after Mom and Pop retailers. And I commend him for his 

hard work on this legislation and efforts to target the source of the 

problem. 


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And, Mr. Chairman, I do have a transcript of a colloquy that was 

done on the floor with—by Mr. Engel and I believe Mr. Whitfield, 

and I would ask unanimous consent to submit that for the record. 

Mr. RUSH. Hearing no objections, so ordered. 

[The information appears at the conclusion of the hearing.] 

Mr. RADANOVICH. Thank you, Mr. Chairman. 

My question is does the FTC concur with Mr. Engel’s policy intent on this legislation to exempt retailers? 

Ms. GREISMAN. Speaking on my own behalf, which is all I can do 

at the moment, yes, that is consistent with my understanding of 

the bill. 

Mr. RADANOVICH. All right, and so you do agree that Mom and 

Pop stores who have done nothing wrong but rather than—they 

shouldn’t be on the hook for the bad actors? 

Ms. GREISMAN. They have not been a target of the FTC enforcement, and I would not anticipate looking toward them in any foreseeable future. 

Mr. RADANOVICH. OK. The FTC staff provided technical comments in a redline version of H.R. 3402 in the previous Congress. 

The Commission’s comments did not delete the original language 

that carved out retail merchants, only engaged in point-of-sale 

transaction with consumers but rather only made a technical 

change to it. The language was removed as it moved to the House 

Floor for consideration. 

Does the Commission believe that there is any harm if that limitation is placed back in the legislation? 

Ms. GREISMAN. I would have to look at the precise language. I 

don’t remember it specifically. 

Mr. RADANOVICH. If it were as simple as just, you know, making 

sure that retailers were not Mom and Pop stores and as such were 

not held liable under this legislation. 

Ms. GREISMAN. Our concern in that context I believe would be 

that a carve-out is not needed and it is not necessary and as a general matter we disagree with carve-outs to bills. 

Mr. RADANOVICH. So you didn’t—did the FTC support the deletion of the exemption? 

Ms. GREISMAN. I honestly don’t remember. I will have to check. 

Mr. RADANOVICH. If you could get back to me on that, that would 

be great. Thank you. 

What is the current civil penalty for violation of Section 18 of the 

FTC Act? 

Ms. GREISMAN. Sixteen thousand dollars per violation. 

Mr. RADANOVICH. Uh-huh. Does that mean that without some 

sort of legislative limitation such as a definitional exemption or injunctive relief for not knowing violations, that Mom and Pop stores 

or bodega stores could be liable for up to $16,000 if it unwittingly 

sells a $5 prepaid card that omits particular disclosures? 

Ms. GREISMAN. Under the Federal Trade Commission Act there 

is a knowledge standard that FTC would have to satisfy in order 

to impose a civil penalty on any entity. 

Mr. RADANOVICH. Uh-huh. Would the FTC support amending the 

bill to include a retainer exemption? I am sorry. You addressed 

that before, but are you speaking as a commissioner or as the Commission or—— 


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Ms. GREISMAN. I am speaking solely on my own behalf, and on 

my own behalf I do not believe we would support that. 

Mr. RADANOVICH. Because you feel that that exemption is not 

necessary. 

Ms. GREISMAN. Correct. 

Mr. RADANOVICH. Alternatively would the FTC support limiting 

relief against those—these point-of-sale retailers in case of not 

knowing, non-knowing violations to injunctions similar to the limitations for State actions in the bill? 

Ms. GREISMAN. I am sorry. I am not sure I follow your question, 

sir. 

Mr. RADANOVICH. Would the FTC support limiting relief against 

these point-of-sale retailers in cases of non-knowing violations to 

injunctions similar to the limitation of State actions in the bill? 

Ms. GREISMAN. I think for the same reasons I just stated that as 

a general manner—matter we disfavor any particular exemptions. 

We probably would not support that. 

Mr. RADANOVICH. All right. Thank you very much, and Mr. 

Chairman, I yield back. 

Mr. RUSH. The Chair thanks the gentleman. 

The Chair now recognizes the Ranking Member, Ms. Schakowsky, for 5 minutes for questions. 

Ms. SCHAKOWSKY. Thank you, Mr. Chairman. I want to give a 

special welcome to Mr. Kabba. I like to welcome people from our 

hometown but also to say that I have worked very closely with the 

Illinois Coalition for Immigrant and Refugee Rights, and I appreciate your work. And, again, as I said in my opening statement, it 

has particular resonance in my district, which is so immigrant rich, 

and people coming from all over the world. 

Let—who was it that talked about technologies not being too specific? Was that you, Ms. Greenberg? Oh, you did. My understanding 

is that—and I don’t know if they exist right now, but actual telephones, cheap telephones that—instead of cards that could be sold. 

In other words, you know, instead of a card or other technologies 

where this—it would have exactly the same affect, but this legislation wouldn’t cover it because it is not a card. 

Is that what you were concerned about? 

Ms. ACAMPORA. It was being not so specific because technology 

keeps changing, so actually we recommended the language that 

was in the Senate bill. 

Ms. SCHAKOWSKY. Which—— 

Ms. ACAMPORA. Which doesn’t go into some of these technologies, 

because technology keeps changing. 

Ms. SCHAKOWSKY. Are you referring to a card versus something 

else? Is that what you are saying? 

Ms. ACAMPORA. It could be. Yes. It could be that there will be 

changes so it won’t be a card and so that if the bill is just specific, 

you are leaving loopholes open to these people who are very inventive and who are the bad actors. They will find a loophole in the 

law, and they will look to do something else. 

Ms. SCHAKOWSKY. Ms. Greisman, would you comment on that as 

well? 


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Ms. GREISMAN. We would have to take a look at the specific language of the bill. I can’t address whether there are any loopholes 

at the moment. It is certainly something we will look into. 

Ms. SCHAKOWSKY. Well, at the moment but I am wondering if 

you could—if you have any advice on drafting legislation that 

would have some staying power. 

Ms. GREISMAN. Yes. We specifically do oppose the exemption for 

wireless prepaid providers. 

Ms. SCHAKOWSKY. OK. Let me see. When you said that there are 

no remedies, Mr. Kabba, do you see any—is that a matter of consumer education in your view or the fact that there really aren’t 

any remedies right now, that people are left at the mercy of the 

calling card companies? 

Mr. KABBA. I think it is really the fact that currently there are 

no remedies all across diverse communities we see this, you know, 

the fact that we do not even have one standardized place for people 

to turn to, even if it is a toll-free number that we can say this complaint can be lodged there. That I think would be helpful. 

The consumer education is not as difficult as I would imagine if 

we have clear language; simple, clear language from the providers. 

The fact that they are using extra-fine print in language that we 

do not even, as advocates, understand, less, you know—so when 

you are talking about limited-English-proficient households, you 

know, that, in effect, makes it harder. But I do know that right 

now the fact that there is no way to lodge complaints, you know, 

and when you are dealing with cards that keep on changing their 

plan names, the target households, making sure that, yes, people 

who are from Asia can feel like, oh, this card is special because it 

has something that reminds them of their home. You know, or in 

the case of Africa, come up with a card and when, in fact, it is really the same provider if you read the fine print. 

We need to make sure that we really have a place to lodge complaints. 

Ms. SCHAKOWSKY. OK. Does the State of New York have any 

remedies, and I am assuming because you are here, your view is 

that national legislation certainly would be preferable. 

Ms. ACAMPORA. We do have a law, and, of course, our law as 

compared to what a new national standard would be would be less, 

but we do like the flexibility issue for States because, as I said in 

my statement, the State cops, when something happens, people are 

coming to the local officials, and so that the flexibility that allows 

us to address a problem right away is crucial, but the uniformity 

is still a good thing to have. We still could use more teeth in legislation. Yes. 

Ms. SCHAKOWSKY. OK. Ms. Greenberg. 

Ms. GREENBERG. I think Mr. Kabba mentioned an interesting 

idea. One thing we might think about is having a statement on the 

card, if you have issues or concerns about use of this card, call this 

toll-free number, and it could be a place that would log complaints 

and see which providers are raising the biggest or creating the biggest problems. I think, you know, we would begin to have a database of where the rip-offs were happening. 

And one other thing—— 


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Ms. SCHAKOWSKY. And would the FTC be the right place for 

that? 

Ms. GREENBERG. We will see if Ms. Greisman agrees to that, and 

she probably won’t on the spot, but, yes, I would think it would 

have to be a, you know, a Federal clearinghouse for this kind of 

information. 

One other thing I want to say is that I lived abroad for a year. 

I lived in Australia, and when you buy a calling card there, and 

it says you are going to get 500 minutes, you get—you always get 

those minutes. So this is not rocket science. It can be done. They 

just have tougher regulations, and here I use cards here all the 

time and routinely they, you know, use them once, they are—the 

value dissipates almost immediately. 

So I know this can be done, and I am sorry to use up your time. 

Ms. SCHAKOWSKY. Yes. No. My time—although, Mr. Chairman, 

I—if we could later, I do have one or—— 

Mr. RUSH. The Chair wants to inform the Vice Chair that we will 

have a second round for 2 minutes each for each member to ask 

a second round of questions. 

The Chair now recognizes the gentleman from Pennsylvania, Mr. 

Pitts, for 2 minutes. Five minutes. 

Mr. PITTS. Thank you, Mr. Chairman. 

Ms. Greisman, the FTC works with the FCC and State AGs and 

other State and local agencies to combat unfair and deceptive calling card practices. How do all these agencies divide up enforced responsibilities? And with all these entities involved in enforcement 

do you end up with duplicative efforts? 

Ms. GREISMAN. No, sir, we do not. Dual Federal and State enforcement really is more the norm than the exception, and we see 

that most particularly in the telemarketing area where this type of 

dual enforcement scheme has been enormously effective and productive, and in fact, working through task forces such as the Prepaid Phone Card Task Force that we created back in 2007. We do 

allocate resources and share information and work in a very cooperative manner. 

Mr. PITTS. Do inconsistent State laws place service providers in 

an untenable situation by prohibiting activities in one State that 

are permitted in another? Are prepaid calling card services usually 

tailored on a State-by-State basis, or are they generally uniform 

throughout the United States? 

Ms. GREISMAN. What I can say is that there are 11 States currently that have specific statutes or regulations addressing the prepaid phone card industry, and I am not aware of problems that 

those different laws have presented or posed. 

Mr. PITTS. Would it be easier or more efficient to coordinate with 

the States on enforcement actions if there were a single standard? 

If there is a single standard, isn’t it easier to catch fraudulent actors? 

Ms. GREISMAN. I don’t believe that is necessarily the case. I think 

what we have now are different standards among the various 

States and at the Federal level, and for example, in the telemarketing area. That has not been a problem at all. 

Mr. PITTS. Now, Mr. Ramminger offers two proposed solutions to 

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posals involve either a change to the definition or a change to require the FTC to address it through its required rulemaking. 

What do you think of those proposals? 

Ms. GREISMAN. Well, I would like to take this opportunity to correct a misstatement I made in response to Mr. Radanovich’s question. Actually, as I understand it, distributors, the way distributors 

currently is defined in the bill is a way that would exclude pure 

retailers, which I think is an issue that was raised earlier. I would 

have to look at the type of proposal that Mr. Ramminger is proposing with respect to distributors, but as a general matter, as I 

said before, my position is that we would not favor excluding any 

particular entity. 

And the three cases the FTC has brought have, in fact, been 

against distributors. 

Mr. PITTS. Ms. Greenberg, at what point do too many disclosures 

overwhelm consumers to the point where they disregard them or 

never read them? 

Ms. GREENBERG. Yes, sir. That certainly is a concern, and that 

is why we recommended something much more uniform, some sort 

of uniform text on every card because, you know, with the fine 

print as we can see there with this very good example, you know, 

at some point it is too small to read, and people don’t really know 

what to do with the information. 

So if we could have some uniformity on these cards, I think that 

would be a great benefit to consumers. 

Mr. PITTS. And as Mr. Kabba said, it should be in simple, plain 

English. 

Ms. GREENBERG. That is correct. 

Mr. PITTS. Yes. Should calling card companies not be allowed to 

set their own rates and fees as long as they disclose them completely? 

Ms. GREENBERG. That is a question for me? Yes. 

We—this is why we call this the wild west because right now 

they can, these companies could set whatever fees they wish. They 

can promise—the rules can change at any moment. So we are really calling for much more oversight on—both on the part of the FTC 

and this bill to try to curb some of the worst practices. 

Mr. PITTS. Mr. Kabba, do you know if the FCC has received complaints about the prepaid wireless market, and if so, do you know 

what the FCC has done to resolve those complaints? 

Mr. KABBA. Not to the best of my knowledge but I do know that 

it is a concern to us, you know, and I hope that there will be some 

standardized way for us to really lodge those complaints. 

Mr. PITTS. We don’t have much time, but what percentage of the 

market would you say, Mr. Kabba, are bad actors? 

Mr. KABBA. At this point I can really say that the vast majority, 

you know, and that is why this problem needs to be addressed, and 

I really commend the subcommittee for focusing on it. It is very 

hard to really pick out the good actors, you know. Last month alone 

I used probably four different cards, and I can show you that all 

the cards did not deliver the number of minutes. So it is not a case 

where you have a good apple in the bag of bad apples. It is really 

the bag that you need to look at, the whole bag. 

Mr. PITTS. My time has expired. Thank you, Mr. Chairman. 


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Mr. RUSH. The Chair now recognizes Dr. Gingrey for—no. Mr. 

Stearns. I am sorry. Mr. Stearns for 5 minutes. 

Mr. STEARNS. Thank you, Mr. Chairman. 

Ms. Greisman, under the law the jurisdiction of the FCC and the 

FTC would share jurisdiction, but I don’t think they necessarily 

overlap if I understand. If the jurisdiction in this area was to overlap, for instance, by removing the common carrier exemption so 

that the FTC can bring actions against FCC-regulated entities, the 

question would be could common carriers find themselves at risk 

of being compliant with one agency’s rules but subject to a different 

enforcement regime by a different agency, enforcing the same rule? 

Ms. GREISMAN. I don’t believe so, sir. I think the rules of the 

road would be remarkably consistent, and that is what we have 

seen in the telemarketing area where both the FTC and the FCC 

enforce very similar rules involving the telemarketing industry, 

and I don’t believe we have seen any consistent or any inconsistent 

or duplicative efforts. For example, I think do not call is a prime 

example of that. 

Mr. STEARNS. Would the FTC support the inclusion of language 

that is similar to that in the Senate bill that essentially limits the 

FCC enforcement in this area where the FTC enforcement authority exists? 

Ms. GREISMAN. I don’t recall that specifically in the Senate bill, 

but I—the FTC’s—— 

Mr. STEARNS. My staff says it is in there so—— 

Ms. GREISMAN. OK. I certainly would take your word for that. I 

just can’t recall it myself. 

Mr. STEARNS. Yes. Let us just go under that assumption. I think 

people in the audience are nodding, so let us just assume that and 

then just see if you can answer the question with that premise in 

mind. 

Ms. GREISMAN. If I understand your question, the FTC’s view is 

that the common carrier exemption is outdated, and lifting it will 

not create inconsistent or duplicative enforcement efforts by the 

FTC and the FCC. 

Mr. STEARNS. Uh-huh. I think this is probably a reiteration of 

what you have already answered, but you have testified it is never 

a good idea to limit—this is for Acampora. You said that it is never 

a good idea to limit State consumer protection. 

However, without preemption is it, isn’t it farfetched to see that 

if disclosure is required by the Federal Government and even onethird of the States, let alone all 50, that the legally-required disclosure can end up looking something much like that poster over 

there? And I think it was suggested earlier that people obviously 

are not going to read it if it looks similar to that poster over there. 

You suggest requiring disclosure on cardstock, and I guess the 

question is would the cardstock distribute with cards? Will the 

cardstock distributed with cards have to be as big as that poster 

to fit all those disclosures? I mean, that is what we are thinking 

about. 

Ms. ACAMPORA. Well, the cardstock would be the same size as 

the calling card, and it would simply have on there the warning to 

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tion for them, which sometimes is on that packaging getting 

thrown out, and then they can’t see it. 

So we thought we would kick this around at the NARUC committees from commissioners from all the States, and this is something 

that was brought up that everyone agreed with could be helpful. 

Mr. STEARNS. You have closed on a House before, and did you 

read all the fine print on the mortgage statement of the—you know 

how complicated it is? Sometimes it is 30 pages. 

Ms. ACAMPORA. I didn’t, but my husband did. 

Mr. STEARNS. Oh, you have a lawyer do it? 

Ms. ACAMPORA. No, he is not a lawyer, but he is a very precise 

man. 

Mr. STEARNS. But most people have a lawyer. I mean, at the rate 

we are going if you have that card, you are going to need a lawyer 

once you buy the card to get this whole thing. You are going to 

need a lawyer to see what it is. I mean, obviously, wouldn’t you 

think you would want to make it simplified? 

Ms. ACAMPORA. I think this is simplified. 

Mr. STEARNS. With 50 States having separate, different connotations on the card? 

Ms. ACAMPORA. Well, you have to give the States flexibility. I 

mean, we like the idea of the Federal Government having a standard but—— 

Mr. STEARNS. And remember, we passed this bill without this by 

unanimous agreement in this—so both—bipartisan bill, the Engel 

bill passed, everybody supported it without what you are requesting, so I think—— 

Ms. ACAMPORA. Well, you are jumping from card to now to the 

various—— 

Mr. STEARNS. OK. 

Ms. ACAMPORA [continuing]. Degrees. So let us just look at the 

flexibility that States need, but also I believe in the bill the language, the Federal law would prevail if there was a problem. 

Mr. STEARNS. All right. As I understand it each State would have 

the flexibility to do what they want, and the Federal law—— 

Ms. ACAMPORA. They do but if there was a case where it was 

brought to—where the Federal Government would be involved, the 

Federal law would prevail. 

Mr. STEARNS. OK. My time has—but you would agree that something that complex on a small card would be very difficult to convey to—— 

Ms. ACAMPORA. That wouldn’t be on the small card. The information that consumers would need to make a phone call or to go on 

a Web site, that is the information that would be on that card, not 

that. 

Mr. STEARNS. You don’t think this would create a lot of litigations? 

Mr. RUSH. And the gentleman’s time is up. We have—there is a 

vote occurring on the floor, and we want to try to finish up the 

questioning before we would have to recess for the vote. 

The—Mr. Scalise, the gentleman from Louisiana. I am sorry. Dr. 

Gingrey is recognized for 5 minutes. 


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Dr. GINGREY. Mr. Chairman, thank you. Sometimes myself and 

Mr. Scalise get confused. He likes to walk around saying he is Dr. 

Scalise, but we know better. Mr. Chairman, thank you. 

I want to address my question, the first question to Mr. 

Ramminger. In your testimony you discussed the need to hold the 

prepaid calling industry accountable for the current abuse of the 

system, abuses of the system. However, you also discussed the need 

for your industry to be held accountable, only if they know about 

the incorrect information on the calling cards that are being distributed. 

Under the bill previously considered by the subcommittee that 

ultimately passed the House, there was an exemption for point-ofsale retailers if they sold these cards. Under the current version of 

this bill that exemption for retailers no longer exists. 

So my question is this. How does this potentially affect your industry, and if you can speculate the point-of-sale retailers for whom 

you, I guess you work. 

Mr. RAMMINGER. Yes. We supply. I mean, what we are basically 

asking for is that the protection that was in the original legislation 

last time around that protected the retailers be extended to our distributor members, and I, again, want to make the distinction between our distributors who are buying candy and gum and snacks 

and phone cards and selling it to the retailers and the ‘‘distributors,’’ that are sometimes called distributors, they are buying minutes from a long distance company and making cards. That is a different kind of distributor. 

So, yes, sir. What could happen is if through no fault of his own 

one of my members buys these cards from what is essentially a 

manufacturer of the cards and sells them to a retailer, believing 

what the manufacturer of the card has said, that there are 10,000 

minutes or however many minutes it says there are, the person 

who should be—the entity that should be held accountable if there 

are not that many minutes is the entity that created the card we 

believe, not the distributor or the retailer. And we don’t believe it 

would be appropriate for our distributors to be fined $16,000 every 

time they sell a phone card that—— 

Dr. GINGREY. Mr. Ramminger, thank you. I understand your response. 

And let me go back then to Ms. Greisman, because I got a little 

confused. You, just a moment ago you asked to correct something 

that you had said. Do you disagree with Mr. Ramminger, or do you 

now agree with him that point-of-sale folks are different than those 

who are the so-called distributors who buy the minutes, who put 

them on the card and the bad actors that can monkey around with 

what is really—is there any disagreement with what he just said 

and your opinion? 

Ms. GREISMAN. My interpretation of the bill is that virtue of the 

way distributors is a defined term there, that retailers are not covered. So retailers are out of this particular bill. I would not support 

taking distributors out, and I would cite to the fact that the three 

cases the FTC has brought have involved retailers. Excuse me. 

Have involved distributors. 

Dr. GINGREY. So you wouldn’t be in favor of taking the point-ofsale folks out of—— 


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Ms. GREISMAN. Point-of-sale people to the extent they are the 

ones I would characterize as retailers already are out of the bill as 

drafted. 

Dr. GINGREY. Let me ask you, Ms. Greisman, another question. 

Do inconsistent State laws place service providers in an untenable 

situation by prohibiting activities in one State that are permitted 

in another? Are prepaid calling card services usually tailored on a 

State-by-State basis, or are they generally uniform throughout the 

United States? 

Ms. GREISMAN. Sir, my understanding is that 11 States have discreet statutes or regulations that do, in fact, tailor the treatment 

of prepaid phone card industry currently. I am not aware that that 

has led to conflicting results or problems in an industry that by all 

calculations appears to be thriving. 

Dr. GINGREY. Yes, but wouldn’t it be easy and more efficient to 

coordinate with the States on enforcement actions if there was a 

single standard? 

Ms. GREISMAN. It might be, but I don’t believe having different 

standards has created any problems to date or necessarily would 

going forward. 

Mr. RUSH. Dr. Gingrey, it seems like your time is complete. 

Dr. GINGREY. Mr. Chairman, thank you. I didn’t realize I 

had—— 

Mr. RUSH. I didn’t either. 

Dr. GINGREY. I yield back. Thank you. 

Mr. RUSH. Thank you so much. 

Now, Dr. Scalise. 

Mr. SCALISE. I only play when we are talking about the 

healthcare debate, I guess. Thank you, Mr. Chairman. I know we 

have votes. I will try to run through this real quick. 

First, Ms. Greisman, on—earlier I think in your testimony you 

talked about some of the bad actors, the worst actors in the prepaid 

industry and now moving over to the wireless market. 

First, do you have a list of those worst actors, and have you all 

been taking any action against them as they have been doing 

things both in dual industries, both prepaid and wireless? 

Ms. GREISMAN. Sir, we don’t have jurisdiction over them. We are 

talking about carriers that would migrate into the wireless space. 

We currently have no jurisdiction over common carriers. But what 

I can say is that we have seen the advertising and marketing for 

the wireless prepaid phone card services looks significantly similar 

to—in the non-wireless space, and in particular we do see that they 

are targeting immigrant populations. 

Mr. SCALISE. Have you taken action against them on the prepaid 

side? 

Ms. GREISMAN. We do not have—our prepaid phone court cases 

have involved only distributors. 

Mr. SCALISE. And if I could go back on, Mr. Ramminger, I know 

it seems like there is a little, I don’t know if it is a rift or the definitions, and obviously there is a dispute between a distributor, is 

the definition of distributor first in a way that you feel is fair, but 

also when the statement that retailers are out of the bill, is that— 

are you all comfortable with that, too? Do you feel that the people 


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that really don’t have any part in—if there is fraud going on, they 

have no part in it, but are they really being pulled into it? 

Mr. RAMMINGER. Yes. I mean, I think it is fair to say that we 

certainly support taking the retailers, the liability away from the 

retailers. What we are saying is we also believe that our distributor 

members, similar to the retailers, are buying from effectively a 

manufacturer. Occasionally the people who make these cards, because they are buying minutes, they are not selling widgets. They 

are buying minutes and putting them on a card, those guys are referred to as distributors, too. That is why I think the confusion is 

coming in. Our guys are not buying minutes and putting them on 

a card. They are simply buying the cards and selling them to the 

retailer, who is selling them to the consumer, and we don’t think 

we should have to be liable unless, you know, it can be shown that 

somehow—— 

Mr. SCALISE. Think you are doing something deliberate or there 

is harm intended. I appreciate it. I know we have got to go, so I 

yield back. 

Mr. RUSH. The Chair thanks the gentleman. 

The Chair thanks all the witnesses for the gracious use of your 

time. You have sacrificed a portion of your busy day to us, and we 

really appreciate your testimony. It has been very enlightening for 

us all, and you certainly have illuminated a path for us as we proceed with this matter. 

I would just ask that you be available to us for members to submit their questions to you in writing and then if you would respond 

within 2 weeks to those questions, we would be delighted. 

And, again, we thank you so much for your time. We do have a 

vote, so we will rush over to the floor in order to cast four votes. 

Thank you very much for your presence, and the subcommittee is 

now adjourned. 

[Whereupon, at 11:45 a.m., the Subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 


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