Ofcom launches investigation of calling card giant Lycatel

Complaints trigger inquiry into whether company has infringed consumer laws

The communications watchdog has launched an investigation into whether the UK's largest seller of pre-paid international calling cards has broken consumer protection laws.

Ofcom launched the inquiry yesterday following complaints to its advisory team and Consumer Direct. The decision to start an investigation also followed discussions with the Trading Standards Offices, which said it had received complaints.

The regulator is to study whether Lycatel Distribution "has breached any relevant consumer protection legislation". It will also scrutinise the company's advertising practices, with pre-paid cards marketed as a way for customers to save money on international calls. The cards are usually aimed at the UK's immigrant population.

If the regulator finds the company has infringed its rules, it could demand a fine of up to 10 per cent of its revenues. If it has broken contract or consumer laws, Lycatel could be taken to court. This could include if the company is found to have overcharged its customers, offered less minutes than advertised or introduced unfair terms and conditions.

Beyond investigating potential infringements to consumer protection law, Ofcom is to examine if Lycatel is complying with obligations to publish "clear and up to date information about its prices and terms and conditions".

Lycatel , which was set up in London in 2003, is one of the largest international calling card sellers in the world. The group offers pre-paid telephone cards and mobile services and has over nine million customers "within expatriate and ethic global niche segments that want to make low cost international calls". The privately owned group also launched a SIM-only pay-as-you-go services in 2006.

Lycatel said it currently completes over 2.9 million voice calls globally every day. A spokesman for Lycatel said yesterday that the group was to get in touch with Ofcom "to deal with their concerns". Beyond assuring its customers that "it remains committed to providing great quality and value," the company declined to say much else.

Prepaid calling calls are generally sold in denominations of £5, £10 and £20, with customers dialling an access number and typing in the pin printed on the back of the card.

This is not the first time Ofcom has investigated the market. The regulator launched an investigation into the entire market in December 2003, and said yesterday it "took action to ensure a number of firms improved the way they advertised their charges and terms and conditions".

The regulator feared at the time that customers were being overcharged, and investigated how far the full range of call charges and terms of conditions were communicated to customers. The investigation was design to improve the quality of information available. Lycatel was not understood to be among those named in the original investigation, although three rivals were named. The European Calling Card Services Association presented evidence at the time that nearly half of all cheap rate international calling cards sold in the UK contained "fraudulent elements, such as premature expiration".

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

The secret CIA Starbucks

The coffee shop is deep inside the agency's forested Virginia compound
Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

How the Establishment closed ranks over fallout from Nessie 'sighting'

The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
One million Britons using food banks, according to Trussell Trust

One million Britons using food banks

Huge surge in number of families dependent on emergency food aid
Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

2,500 years of history in 3,000 amazing objects

Excavation at Italian cafe to fix rising damp unearths trove
The Hubble Space Telescope's amazing journey, 25 years on

The Hubble Space Telescope's amazing journey 25 years on

The space telescope was seen as a costly flop on its first release
Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

Did Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
Apple's ethnic emojis are being used to make racist comments on social media

Ethnic emojis used in racist comments

They were intended to promote harmony, but have achieved the opposite
Sir Kenneth Branagh interview: 'My bones are in the theatre'

Sir Kenneth Branagh: 'My bones are in the theatre'

The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
The sloth is now the face (and furry body) of three big advertising campaigns

The sloth is the face of three ad campaigns

Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
How to run a restaurant: As two newbies discovered, there's more to it than good food

How to run a restaurant

As two newbies discovered, there's more to it than good food
Record Store Day: Remembering an era when buying and selling discs were labours of love

Record Store Day: The vinyl countdown

For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Usher, Mary J Blige and Will.i.am to give free concert as part of the Global Poverty Project

Mary J Blige and Will.i.am to give free concert

The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
10 best tote bags

Accessorise with a stylish shopper this spring: 10 best tote bags

We find carriers with room for all your essentials (and a bit more)
Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

Paul Scholes column

I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England
Jessica Ennis-Hill: 'I just want to give it my best shot'

Jessica Ennis-Hill: 'I just want to give it my best shot'

The heptathlete has gone from the toast of the nation to being a sleep-deprived mum - but she’s ready to compete again. She just doesn't know how well she'll do...