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
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Customer Service Administrator

£13000 - £15000 per annum: Recruitment Genius: Are you passionate about custom...

Recruitment Genius: Dialler Administrator

£22000 - £25000 per annum: Recruitment Genius: Main purpose: Under the directi...

Ashdown Group: Contracts Manager - City of London

£35000 - £37000 per annum + benefits : Ashdown Group: Contracts Manager - City...

Guru Careers: Tax Manager / Accountant

£35 - £50k DOE: Guru Careers: A Tax Manager / Accountant (ACA / CA / CTA) is n...

Day In a Page

Blairites be warned, this could be the moment Labour turns into Syriza

Andrew Grice: Inside Westminster

Blairites be warned, this could be the moment Labour turns into Syriza
HMS Victory: The mystery of Britain's worst naval disaster is finally solved - 271 years later

The mystery of Britain's worst naval disaster is finally solved - 271 years later

Exclusive: David Keys reveals the research that finally explains why HMS Victory went down with the loss of 1,100 lives
Survivors of the Nagasaki atomic bomb attack: Japan must not abandon its post-war pacifism

'I saw people so injured you couldn't tell if they were dead or alive'

Nagasaki survivors on why Japan must not abandon its post-war pacifism
Jon Stewart: The voice of Democrats who felt Obama had failed to deliver on his 'Yes We Can' slogan, and the voter he tried hardest to keep onside

The voter Obama tried hardest to keep onside

Outgoing The Daily Show host, Jon Stewart, became the voice of Democrats who felt the President had failed to deliver on his ‘Yes We Can’ slogan. Tim Walker charts the ups and downs of their 10-year relationship on screen
RuPaul interview: The drag star on being inspired by Bowie, never fitting in, and saying the first thing that comes into your head

RuPaul interview

The drag star on being inspired by Bowie, never fitting in, and saying the first thing that comes into your head
Secrets of comedy couples: What's it like when both you and your partner are stand-ups?

Secrets of comedy couples

What's it like when both you and your partner are stand-ups?
Satya Nadella: As Windows 10 is launched can he return Microsoft to its former glory?

Satya Nadella: The man to clean up for Windows?

While Microsoft's founders spend their billions, the once-invincible tech company's new boss is trying to save it
The best swimwear for men: From trunks to shorts, make a splash this summer

The best swimwear for men

From trunks to shorts, make a splash this summer
Mark Hix recipes: Our chef tries his hand at a spot of summer foraging

Mark Hix goes summer foraging

 A dinner party doesn't have to mean a trip to the supermarket
Ashes 2015: With an audacious flourish, home hero Ian Bell ends all debate

With an audacious flourish, the home hero ends all debate

Ian Bell advances to Trent Bridge next week almost as undroppable as Alastair Cook and Joe Root, a cornerstone of England's new thinking, says Kevin Garside
Aaron Ramsey interview: Wales midfielder determined to be centre of attention for Arsenal this season

Aaron Ramsey interview

Wales midfielder determined to be centre of attention for Arsenal this season
Community Shield: Arsene Wenger needs to strike first blow in rivalry with Jose Mourinho

Community Shield gives Wenger chance to strike first blow in rivalry with Mourinho

As long as the Arsenal manager's run of games without a win over his Chelsea counterpart continues it will continue to dominate the narrative around the two men
The unlikely rise of AFC Bournemouth - and what it says about English life

Unlikely rise of AFC Bournemouth

Bournemouth’s elevation to football’s top tier is one of the most improbable of recent times. But it’s illustrative of deeper and wider changes in English life
A Very British Coup, part two: New novel in pipeline as Jeremy Corbyn's rise inspires sequel

A Very British Coup, part two

New novel in pipeline as Jeremy Corbyn's rise inspires sequel
Philae lander data show comets could have brought 'building blocks of life' to Earth

Philae lander data show comets could have brought 'building blocks of life' to Earth

Icy dust layer holds organic compounds similar to those found in living organisms