California-based Krossland Communications, Inc., sells prepaid phone cards that promise a specified number of minutes of international telephone service. The cards range from $2 to $100 and are often marketed to immigrant populations who need to call family members in other countries but cannot afford to buy a cellphone. The packaging states the number of available minutes and usually says there will be no connection fees.
To use the cards, purchasers call either a toll-free telephone number or a local access number and enter an identification number provided on the card. After the user enters the destination number, an automated voice tells the user how many minutes are available on the card. Phone service provider Allcom Telink Corp. then connects the call.
Krossland does not tell customers that connection fees are almost always applied against the card’s value, reducing the number of available minutes by up to 40 percent. The company also charges bi-weekly service fees. Customers pay a higher per-minute rate when they use the toll-free number instead of local access numbers or use a wireless phone instead of a landline.
Carol Galvan bought a $5 card that offered 250 minutes and a $10 card that offered 500 minutes for calls to Mexico. She received about half the amount of specified minutes. Lolis Tackwood also received half of the 500 minutes he was promised on his $5 card.
Galvan and Tackwood filed a class action against Krossland and Allcom, claiming untrue and misleading advertising, fraudulent business acts, and false representations in violation of California law; breach of contract; and money had and received.
Krossland agreed to give refunds of up to $16 to customers who purchased a calling card. The company will also ensure all calling cards comply with calling card regulations and disclose connection fees. For five years, it will provide plaintiff counsel with an annual report detailing its compliance with the settlement.
The court has granted preliminary approval.
Citation: Galvan v. Krossland Commun., Inc., No. 8:08-cv-00999 (C.D. Cal. May 21, 2012).
Plaintiff counsel: AAJ member Edith Kallas and Lili R. Sabo, both of New York City; and Alan M. Mansfield, San Diego.