The trouble started when Tom King’s cellphone died on his way to a job interview last year. He saw a public phone at Washington’s Bainbridge Island Ferry and was relieved, he said, when a sticker reassured him that he could make a four-minute call for $1.
That didn’t turn out to be entirely accurate. King made four one-minute calls using his credit card, for which he expected to pay $4. But a few days later, he discovered that he’d been charged $14.98 for each connection, for a total of nearly $60.
“I was shocked,” he said.
Stories like King’s are a cautionary tale for travelers. Fewer than 500,000 public telephones remain in the United States, operated by a network of independent telecommunications companies that set their own rates, which often can be startlingly high. Verizon, the last major telecommunications provider of pay-phone services in the United States, left the industry in 2011 when it agreed to sell almost all of its remaining 50,000 phones.
Stories such as King’s also have inspired one California state senator to propose a law that would require telecommunications companies to disclose credit card charges for pay-phone calls. California Senate Bill 50, which was introduced last month, would amend a 1993 rule requiring pay-phone operators to disclose the cost of a call so that it would include any calls made with a credit or debit card.
Telecommunications companies are taking advantage of a “loophole” in the rules, says state Sen. Ted Lieu of California.
“At the time the law was passed, using a credit or debit card for pay-phone calls was uncommon, and thus not addressed by the law,” Lieu said.
Consumer advocate John Mattes, an attorney who unsuccessfully has sued several companies offering these pricey calls from public phones, says he hopes the legislation will have a ripple effect, encouraging other states to adopt similar disclosure requirements and eventually compelling the federal government to close the loophole once and for all.
“It would be a long-overdue victory for consumers,” Mattes said.
No one knows exactly how many travelers have fallen for these phones, but there have been plenty of reports of overpriced phone calls. Last year, several media outlets reported that U.S. soldiers in transit through Germany were being billed up to $40 for a one-minute phone call home through a company that claimed to be based in Switzerland. But problems with credit card calls from public phones cross my desk with some regularity, and normally, my inquiries on behalf of the customer result in a partial or full refund.
King, who’s a writer by trade, didn’t take the $60 charge lying down. He tracked the charge to a company called WiMac Tel, a company based in Palo Alto, Calif., that offers pay-phone services to “inmate facilities, pay-phone operators, hotels, hospitals, universities/colleges, local exchange companies and consumers nationwide in the USA and Canada,” according to its website.
“WiMac Tel promises customers that their pay-phone systems can make pay-phones profitable again,” said King. “Well, duh! At nearly $15 a minute, I imagine so.”
James MacKenzie, WiMac Tel’s chief executive, said that the $1 rate on the pay phone King saw was for coin calls, not credit cards.
“Unfortunately, there is insufficient space on the pay phone to provide all the various rates associated with operator-service calls,” MacKenzie told me.
Instead, customers can opt in to disclosure through a series of voice prompts when they use WiMac Tel’s service. MacKenzie acknowledged that credit card call rates were significantly higher, attributing them to the “higher costs” associated with those types of calls, including the expenses incurred by having to validate the payment method, billing and collection, bad debt, offering live operators and credit card processing fees.
However, after King complained, the company lowered his bill to $22 – “still pretty high for a pay-phone call,” King said.
Excessive phone charges used to be one of the staples of my consumer-advocacy practice. Hotels considered their phone lines a profit center and would add generous surcharges to their guests’ phone bills, sometimes even imposing fees for lifting the phone from the receiver. That’s largely gone now, thanks to the preponderance of cellphones.
But a smaller threat remains. Lieu estimates that his bill would affect about 30,000 public phones in the state of California, many in places where constituents can least afford the high charges, including prisons and hospitals.
How do you avoid these fees? Keep an extra battery handy when you travel, so that if your cellphone goes dead, you won’t have to resort to using a pay phone. If you must use a pay phone – and there are still times when you’ll need to, such as when there’s no reception – then buy a prepaid phone card.
Given the risk of being overcharged by credit card or debit card, you should reach for your plastic only as a last resort. Try using coins or bills to pay for the call, if possible. We’re still a long way from closing the disclosure loophole for credit card calls, and until then, it seems, your pay-phone calls could cost a lot more than you expect.