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NJ calling-card firm reaches settlement with Florida over deceptive ads


07/01/2009

A major prepaid calling-card company that engaged in deceptive practices in Florida will dial up more than $150,000 to the state and a Hispanic advocacy group as part of a settlement reached Tuesday.

New Jersey-based Locus Communications Inc., also known as GEO Telecom, must reimburse the Attorney Generals Office $50,000 for attorneys fees, costs and future audits, according to the settlement.

The company also must pay $105,000 to the Hispanic Institute, a Washington-based advocacy group, which worked with prosecutors to stop prepaid calling-card companies from targeting Hispanic immigrants through deceptive marketing and advertising tactics.

Many Florida residents use these cards to communicate with their family, friends and loved ones, Attorney General Bill McCollum said. These new standards will protect that essential bond of communication.

Organization president Gus West said the money will help the group continue investigations into the prepaid calling-card industry.

The Hispanic Institute will receive the money over three years.

An official with the Attorney Generals Office said the probe into Locus Communications started in July 2007.

The investigation showed the prepaid calling-card company offered customers unlimited minutes which were not unlimited, rounded up calls to three-minute increments and failed to disclose actual amounts of fees and surcharges, according to the settlement.

The company also advertised in Spanish but printed the disclaimer of fees and surcharges in English.

Under the agreement, Locus Communications must halt deceptive advertisements, provide 100 percent of the minutes advertised, and submit to three years of auditing by the Attorney Generals Office.

Locus Communications is the 13th company to reach a settlement with the attorney general over complaints related to prepaid calling cards.

In November, Business Telecommunications Services Inc., also known as ADMA Telecom Inc., paid the Hispanic Institute $75,000.

The Economic Crimes Division is conducting four formal investigations . . . and constantly reviewing dozens of other companies in this industry, an official at the Attorney Generals Office said.

The companies under investigation have reimbursed the state more than $1 million in costs

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