Most ridiculous court case this year: Washington D.C. sues mobile operator AT&T

Remember pre-paid calling cards? Yeah, me too. I used to use them… when I was twelve. Well, the District of Columbia (better known as America’s capital city, Washington D.C.) is suing AT&T to get back what is known as “breakage” from those cards. What’s breakage? Read on…

Pre-Paid Call Cards

For those too young or too high-tech to know what a Pre-Paid Call Card is, it used to be a widely used method of making phone calls. Typically you buy the card, which has a toll-free number and a PIN on it. The toll free number connects you to a service which makes the rest of your call for you. There’s no bill or after-call charge - you pay the entire amount in the shop you buy the card in (hence “pre-paid”).

The usefulness of these cards is due to the fact that the first number you call is toll-free. So you can use your card from a phone box, or from a friends phone, without causing any cost. When I was a nipper and no one had mobile phones, people used these all the time. These days they’re mostly relegated to international calls and people who live in caves.

Breakage comes into it because people very rarely use the entire amount on their card. Lets say you buy a $5 card, and only use $3 worth of calls. Where does that remaining $2 go? You’ve already paid the call card company who connected the call for you. And that company has already bought those minutes from an operator. So the operator earns $2 revenue from a call it never had to connect - and that is breakage.

What does D.C. want?

It wants the breakage to be paid back to the consumers who bought the cards. According to the DA for Washington, unused balances on pre-paid cards should be regarded as unclaimed property under federal law - it wants AT&T to pay back the breakage to D.C. residents who haven’t used their cards in over three years.

AT&T hasn’t commented yet.

What we think?

I think this is ridiculous. If I buy a sandwich and only eat half of it I don’t get to claim back for the other half. On top of which, exactly how much money are we talking about here? I know call cards are more popular in America than they are in Europe, but this isn’t exactly a treasure trove we’re talking about here.

But as bewildering as the case is, it could cause awful problems if it goes through. It would set a precedent where profit margins for already stressed operators could be massively reduced. If you can claim back unused minutes from a call card, what’s to stop legislators from demanding you can claim back unused minutes from your monthly pre-pay bill?