News and Views

Network Marketing/MLM Analysis

MLM’s or Multi-Level Marketing programs, are often seen as pyramid schemes, where a few people will make a lot of money, while most people will lose money. They depend on agents or representatives bringing more people into the company and creating what is called a downline, something that will bring profit in the future. To try to keep things legal, a product is offered, and phonecards seem to be the perfect product to offer.

A web site called the MLM Credit Bureau (http://www.calgraf.com/mlm/index.htm) lists two companies that have made headlines in the phonecard industry, Destiny and STS. They say this:

"Destiny Telecom -- The Oregon Attorney General filed a complaint for misleading income claims and is now monitoring this company closely. Go to the National Fraud Information Center and click on "Daily Reports." (8/96)"

"Strategic Telecom Systems -- With prepaid phone cards that come with $ .60 per minute rates who is stupid enough to join this company? The bigger problem: large number of complaints on refunds; non-issuance of distributor bonus checks."

I won’t comment on the alleged charges against these companies. What I want to do is advise people to proceed with caution before getting involved. Eventually, the nonsense surrounding these companies catches up with them. Remember Amerivox? They were the first and most famous MLM to appear. There were numerous problems associated with that company, such as a hidden tax that many representatives did not know about or care to disclose, and the ridiculous $10 activation fee on most cards. This is what kept the company going in my opinion. $5 of that activation fee went to Amerivox, while the other $5 to the director whose downline activated the card. A rate that was advertised at 29.9 cents per minute actually cost more like 70 cents per minute when you take into account that a $21 card actually gave you 30 minutes in calls. They haven’t been in the news lately, partly because they have been surpassed by newer companies, and partly because they removed the activation fee, causing the incentives that came along with directorships to decrease. Most representatives who bought into Amerivox are probably still in possession of the phonecards they thought would be easy to resell. STS (Strategic Telecom Systems) have a base rate of 60 cents on most cards, which is way above average. Fueled by speculation based on the fact that some issues sell for large amounts of money, newer issues are pursued and the prices increase. What is interesting about this company is that there seems to be a mad frenzy within their company to buy their products. We are not talking small numbers, there are 200,000 reps. Hopefully there can be a positive spin on this - That these reps will see our hobby, fall in love with it, and become collectors. The unrealistic prices of STS cards can crash at any time. Remember that prices go down as well as up. Moneycard Collector points this out well in their January 1997 issue - check it out for more on MLM’s. They note that the NYNEX Democratic Convention card once sold for $1700, and now can easily be purchased for $400 or less. Monsters of the Gridiron by Sprint once approached $50, but now can be had for $5.

Prepaid Market Analysis

This month’s non-sport insert of Krause Publication’s Sports Collector’s Digest had an interesting survey observation. It states that the current prepaid phonecard market in the US would increase from 750 Million Dollars in 1995 to 2.5 Billion in 2000. What is interesting about this is that the retail sales would climb from about 30% to 60%, with other areas shrinking, such as promotional and collector cards.

Personally, I think this is great news, although others may disagree. For this hobby to really catch on, people need to use the cards. Most people won't purchase a phonecard and not use it - Same as buying a stamp and not using it. However, many stamp collectors started by peeling stamps off envelopes, and many phonecard collectors will get started by picking up used cards at a pay phone.

Blockbuster Video Gift Card

Similar to the Mobil Go Card, Blockbuster Video now sells gift cards in various denominations. These cards expire December 31, 1999, and can be used for anything in the store from video rentals to new music. If you use Blockbuster to rent videos, why not stock up on these cards and receive a free collectible every time you rent? A picture of one is available at the Phonecards On-Line Web Site.

Shell Gas Card

Similar to Mobil Go Card, and now Blockbuster Video, Shell is selling prepaid gas cards at select stations. There is a discount if larger denominations are purchased. The information was received with a credit card bill, and an 800 number was given to order. Unfortunately, that notice has been lost, or is somewhere on my desk (trust me, my desk at the moment is NOT a pretty site!) If anyone has this information, please e-mail me and I will include it in a future edition.

Counterfeit McDonald’s

This weekend at a sportscard show, I actually found a few dealers selling phonecards. One dealer had an interesting McDonald’s card (available at the web site) that showed an old-fashioned McDonald’s restaurant, and the city name Westminster on it (I assume where the first McDonald’s opened?) Even more interesting was that it says limited edition of 500, and this card was #406. There are 5 minutes of phone time on it by AT&T, and it has a Premier Telecom logo on it. It comes in a nice envelope, with a scratch-off on the back. When I asked the price, I was astonished it was only $5.00. What was even more astonishing was that the dealer had three of these cards, all numbered #406 out of 500. I don’t think the dealer is dishonest, he says he purchased these cards from someone at a show. He could not explain why all three had the same number on them. I purchased them because I was intrigued - This was the first counterfeit card I have seen. If anyone has any information on this card, please let me know. I scratched off one of the PINS and tried calling the number, but got a very loud annoying sound on the other end. I plan on phoning Premier Telecom and informing them of my find this week. More on this later.

Sears Phone Card Department

The new Sears Phone Card Department Price List has just been printed. I feel bad for calling this a price list, since it is really so much more. The entire package is in excess of 100 pages, 43 of them being photographs of phonecards. For those of you out there that are new to the hobby and want a list that can double as a reference guide, as well as pictures of hundreds of cards, you definitely want to request this - The list is available free of charge. Contact Sears Phone Card Dept. at 74747.1416@CompuServe.com, or view their web site at http://ourworld.compuserve.com/homepages/phonecard/

Visa TravelMoney Update

Thanks to Lyle Duncan for providing this information. The phone numbers for the 4 banks currently issuing Visa TravelMoney are listed:

Colorado National Bank 303-925-1450
First Bank 800-444-1244
Columbus Bank & Trust 706-649-5377
Barnett Bank 904-987-0725
Visa Travel Money 800-847

-2399

Post Office Story

Received by Al Ramey

Earlier this week I stopped at our Post Office to make the $20 Amex. phonecard purchase. The lady showed me the $20 horse plus two more horse cards at $5 and $10 each. I told her that I wanted the Santa Claus $5 card as shown on the brochure. After a back room discussion they were finally produced and I made the purchase. I mentioned that I probably should get five more $5 Santa Claus cards as they would be good for trading. She told me that she thought that I couldn't do that. She had apparently been told (at that Post Office) that you must buy a $20 card and then a free $5 one. The brochure clearly states that you will receive a free $5 phonecard "with a PHONECARD purchase of $20 or more". I didn't argue, but told them that I would check it out. I returned home and called the U.S. Postal Service complaint number and the man that answered was very courteous. He agreed wholeheartedly with my interpretation of the brochure, and said he would check it out right away and call my post office to explain.

(ed. Note - that is where the story ended, maybe next week we will have a successful conclusion?)

Lilly’s Kids Cards

A free phone card is available from the Lilly's Kids catalog when you purchase $50 or more from the catalog. It is a $5.00 card and says Lilly's Cards on the front and pictures two children talking on the phone. The catalog can be ordered by calling 1-800-505-2250 or writing to Lilly's Kids, Lillian Vernon Corp., Virginia Beach, VA 2379-0002.

From: Maureen Toonkel

Playboy Card

In the latest issue of Playboy's mail order catalog, there is a free gift offer for a Pamela Anderson (ex-Lee) phonecard. With any purchase of $70 or more from the catalog, they will give you a 22-minute Pam phonecard. On the front of the card, it has a picture of Pamela Anderson in a hat (no nudity), with the Playboy name and logo, and the 1-800 number for the catalog. Time is provided bu MCI, and is rechargable. The card is *not* for sale by itself. Playboy can be reached (catalog request, orders, questions) at 1-800-423-9494.

From: Chris Inoue

State Farm

State Farm Insurance - if you have state farm insurance, call your agent for free phone card.

From: Jinnie Katchur

AT&T Hyatt

AT&T- if you have AT&T call 1-800-383-6163 Ext 14485 for free Hyatt 10 min phone card. Or you can switch & get card.

From: Jinnie Katchur

Free Giveaway

For those of you who made it this far, a reader has kindly donated 30 used Japanese phonecards to me, and I have decided to offer them as a giveaway to readers of this newsletter. The first 30 people to send a Self Addressed Stamped Envelope to me at:

The Card Mall

POL Giveaway
17216 Saticoy St. Suite 319
Van Nuys, CA, 91406

will receive one of these cards. Any responses after the first 30 will receive a used card, so nobody will be shut out.

That’s it for now. Hope you all had a Great Thanksgiving (It seems like ages ago)

Until Next Week,

Alan

Distribution

Phonecards On-Line is written and distributed by Alan Cohen. It is a weekly newsletter devoted to phonecards - Current news, viewpoints, and reviews of new issues. It is distributed free of charge, and available two ways.

1) On-Line on the World Wide Web. The address is: http://www.cardmall.com

2) Direct e-mail. Send a message to: phoneline@cardmall.com

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