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Prepaid Phone Cards: What Consumers Should Know

What is a prepaid phone card?

A prepaid phone card is, as its name suggests, a card that a consumer buys for a flat fee in order to make long distance telephone calls. The cards are often advertised as enabling buyers, for a fee of several dollars, to make a specified number of minutes of calls to a certain destination; for example: "$5 for 1000 Minutes to Guatemala." You use the card by calling an access number, which can be either a local telephone number or toll-free number, and you will then be prompted to provide your personal identification number and the telephone number you wish to call. An automated voice may also tell you how much time you have left on your card, and may give you other information or options.

Are there problems with some prepaid cards?

Before buying a prepaid phone card, you should know that the FCC and other federal and state agencies have taken enforcement action against certain distributors or providers of these cards. FCC actions have proposed to penalize certain prepaid card providers a total of $30 million for misleadingly advertising that, for a fee of just a few dollars, with the cards, buyers can make hundreds or thousands of minutes of calls to certain advertised destinations. In fact, in these cases, for that fee, a consumer using a card can make calls for only a fraction of those minutes due to the provider's assessment of multiple fees and surcharges that are not clearly and conspicuously disclosed. Consumers should be particularly careful to ensure that they fully understand all terms and conditions associated with a prepaid card before purchasing.

What should consumers look for before buying a prepaid card?

Before buying a card, you should:

    • Make sure that you understand the instructions on how to use the card
    • Read the fine print on the packaging or back of the card to understand any conditions or limitations on the use of the card
    • Make sure that you understand the rates for your particular phone card
    • Make sure that you understand the fees that may be assessed to use the card, such as whether, and if so, by how much, the card's value will be reduced by any "post-call," "disconnect" or hang-up" fees after each time you use the card, or by a "maintenance" fee charged after you use the card for the first time and again at regular intervals
    • Check whether the advertised minutes for the card apply only to a single call or over the course of multiple calls
    • Check the card's expiration date to avoid losing unused minutes
    • Look for a toll-free customer service number provided with or on the card, and ensure that, if you use a toll-free access number to place a call, you will not be charged for doing so
    • Ask your friends and family to recommend cards they have used with which they had a positive experience

What types of complaints has the FCC received?

Some common complaints include:

    • Access numbers and/or PINs that don't work
    • Service or access numbers that are always busy
    • Card issuers that go out of business, leaving people with useless cards
    • Rates that are higher than advertised, or contain undisclosed fees
    • Imposing undisclosed "post-call" fees deducted after a call's completion
    • Imposing undisclosed "maintenance" fees deducted after a call or at regular intervals
    • Cards that charge you even when your call does not go through
    • Poor quality connections
    • Cards that expire without the purchaser's knowledge
    • Per-call fees deducted from the time

What should I do if I have a problem?

First, try contacting the card issuer, who is usually listed on the back of the card (or who can be identified by calling the customer service number listed on the card). If that doesn't work, you can file a complaint with the FCC.

How do I file a complaint?

You have multiple options for filing a complaint with the FCC:

    • File a complaint online
    • By phone: 1-888-CALL-FCC (1-888-225-5322); TTY: 1-888-TELL-FCC (1-888-835-5322); ASL Videophone: 1-844-432-2275
    • By mail (please include your name, address, contact information and as much detail about your complaint as possible):

Federal Communications Commission
Consumer and Governmental Affairs Bureau
Consumer Inquiries and Complaints Division
445 12th Street, S.W.
Washington, DC 20554

Be sure to include:

  • The names and phone numbers of any companies involved with your complaint (it's a good idea to provide ALL of the information obtained on the calling card at issue, including any associated information that came with the card)
  • The amount of any disputed charges, whether you paid them, whether you received a refund or adjustment to your bill, the amount of any adjustment or refund you have received, an explanation if the disputed charges are related to services in addition to residence or business telephone services

Other problems?

If you are having a problem with the local retailer (such as a discount store or local market) from which you purchased the card, try calling or writing your local Consumer Affairs or Better Business Bureau or state Attorney General. These phone numbers are often found in the blue pages or government section of your local telephone directory.

In some cases, prepaid phone cards are marketed by companies other than the telephone company or service provider. If you have concerns about deceptive or false advertising or marketing practices by these entities, you can seek additional assistance from the Federal Trade Commission. You can also submit a complaint to the FTC online; by calling toll-free to 1-877-382-4357 (voice) or 1-866-653-4261 (TTY); or writing to:

Federal Trade Commission
600 Pennsylvania Ave., NW
Washington, DC 20580.

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Prepaid Phone Cards: What Consumers Should Know Guide (pdf)

Updated: September 18, 2015

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