Prepaid calling card settlement reached

Fort Lee, N.J.-based prepaid phone card distributor Locus Telecommunications Inc. reached a preliminary settlement with plaintiffs in a nationwide class-action lawsuit. Among the lawsuit's allegations was that Locus distributed or sold prepaid calling cards and services to consumers without fully disclosing rates and fees.

The settlement of Flores et al. v. Locus Telecommunications Inc. et al. affects consumers who purchased Locus prepaid calling cards and services in the United States from Sept. 28, 2007, to Nov. 27, 2013. Locus agreed to refund the price of PIN numbers to customers who can submit proof of purchase of cards or services. Locus agreed to refund up to $1.4 million to eligible consumers.

The settlement still has to receive final approval from the superior court judge in the County of Los Angeles, Central District. Members of the settlement class have until Feb. 3, 2014, to object to the settlement. As part of the settlement, Locus denied any wrongdoing or liability. The parties reportedly agreed to the settlement to avoid further litigation costs and uncertainties.

In recent years, prepaid calling card companies have been brought to task by the Federal Trade Commission for allegedly misrepresenting the amount of calling time customers received when they purchased long distance international calling cards. One such case was settled in February 2012 when Millennium Telecard Inc. and its affiliates agreed to pay $2.32 million as part of a settlement of charges brought by the FTC.

In that case, the FTC said it conducted testing of the calling cards and found that the cards delivered an average of only 45 percent of the minutes advertised.

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