Prepaid phone card industry is a very big and tough business, and it is also dirty. When IDT sued its fellow competitors, it showed how bad the situation is. Here's some insight on the lawsuit.

Class action
Does a class action lawsuit get our industry’s attention? Not really. When IDT, the volume leader in our effervescent industry, the “Coca Cola” in a world of Pepsi and Dr. Pepper, was named in a class action lawsuit, few people in our industry seemed to care. The suit represented U.S. customers who purchased IDT calling cards from 1997 to Jan. 22, 2007, claiming that the amount of minutes advertised on cards did not match the amount of minutes delivered. Sound familiar? As IDT headed to the courthouse, many of their competitors seemed to continue doing business as usual. IDT’s decision to fight the allegations brought heated discussion at a past Intele-CardNews Editorial Advisory Board meeting held by this magazine. Some felt IDT was surely wrong and should pay. IDT maintained innocence and the right to defend against any and all allegations. In January when the suit was settled for $20 million, IDT continued to maintain innocence, but agreed to settle to eliminate litigation costs and uncertainties.

Tit for tat
After settling their lawsuit and amending their business practices, IDT’s second-quarter results were less than stellar. In fact, a 10 percent drop in revenue led IDT to investigate its competitors’ calling cards. IDT claims they found their rivals significantly overstating the number of minutes delivered on their cards. In what some would call an ingenious business maneuver and others would term a total shock, on March 8, 2007, IDT sued six of its competitors, alleging that the companies were essentially doing what IDT was accused of in the class action suit, not delivering advertised minutes on prepaid calling cards. IDT’s civil anti-fraud lawsuit is seeking preliminary and permanent injunctions against the competing companies. The complaint alleges that deceptive practices by their competitors are causing consumers to lose more than $1 million a day. They are merely trying to level the playing field, they say. This leaves some pundits wondering how long this can go on? How many more lawsuits will there be? Will this industry be driven out of business by legal fees? Will smaller companies be forced out of business or will they start delivering the minutes they advertise?

http://phonecardstop.blogspot.com/2007/10/lawsuit-against-idt-provider-of-prepaid.html

I will post the detail of IDT law-suit later when I summary the whole events. For now, visit http://phonecardstop.blogspot.com for the news.