IDT and Union Telecard Alliance Commence Anti-Fraud Lawsuit on Prepaid Calling Cards

IDT Telecom, Inc. and Union Telecard Alliance, LLC (collectively, "IDT") commenced a civil anti-fraud lawsuit today against certain of its competitors in the US prepaid calling card market. The lawsuit, which was filed in federal district court in Newark, New Jersey, alleges, among other things, that defendants CVT Prepaid Solutions, Inc., Dollar Phone Corp., Dollar Phone Services, Inc., Dollar Phone Enterprises, Inc., Dollar Phone Access, Inc., Epana Networks, Inc., Locus Telecommunications, Inc., Total Call International, Inc., STi Phonecard, Inc., Find & Focus Abilities, Inc, VOIP Enterprises, Inc., and Telco Group, Inc. (collectively, "the Defendants") are systematically falsely promising minutes that consumers cannot obtain from the cards they have bought. The complaint alleges that the defendants' deceptive practice causes consumers to lose more than one million dollars a day.

The lawsuit further alleges that the defendants' fraudulent conduct in the pre-paid calling card marketplace has negatively impacted IDT's market share, resulting in a reduction in IDT's revenues, and also has caused reductions to net income. The suit seeks a preliminary and permanent injunction barring Defendants from continuing in this massive and systemic fraud as well as money damages.

To the average New York cellphone addict, a business based on $2 and $5 prepaid phone cards may seem like a dinosaur. But the small denominations add up to a $4 billion industry, and a brutal battle for market share underlies Jonas' campaign. IDT claims a direct link between the alleged fraud and its slumping revenues. In the first half ended Jan. 31, IDT's prepaid products revenue plummeted 18 percent to $493 million, and the company lost $4 million on continuing operations.

Through its Telecom subsidiary, IDT provides telecommunications services worldwide to the retail and wholesale markets telecommunications services and products, including prepaid and rechargeable calling cards, consumer local, long distance, and wireless phone services, and wholesale carrier services.

Source:
http://www.tmcnet.com/news/it/2007/03/08/2403218.htm