NEWS / COMMENTARIES

The Chudnow Report© by Jim Chudnow

This is a "follow-up" to my TOWER RECORDS Gift Card report, published online on December 5th in POL # 184 (wherein I spoke of the difficulties of being allowed to actually keep cards described by the offeror as "Collector" items):

Last week, I personally went to a Tower store in midtown Chicago, to see what would happen if I bought a gift card and left some balance on the card-- would I get it back?... Right on the card itself, it says "Balance remains on card", & its cardboard holder reiterates that, stating, "Cards may be redeemed for full or partial value... Any remaining balance will stay on the card and appear on your receipt."

I very clearly stated what I wanted to the sales person: use my Visa card to put $ 10 (the minimum) on a "POKEMON-The First Movie" card, and then use that gift card to pay for the CD I had (which'd leave 22 cents on the gift card). The young salesman seemed bewildered by my request. He tried to charge me SEPARATELY for the card and the CD

(doubling the cost).

When I calmly complained, he called over the young manager, who immediately told him that yes, what I wanted to do was FINE. But, he had problems, and had to call the manager over again for his help in how to do it all (asking for my gift card back a second time). After the manager left, he tried to KEEP the gift card, & give me cash back.

After I indicated that was unacceptable, he went to another sales person, and they used a scissors or similar device to "fish" the card out of the cash drawer where he'd put it (thus resulting in some scratches on the card). When I asked for a receipt, it did NOT indicate any "balance" left on the card-- it showed the error of supposedly returning my balance

in cash.

What should've been a 2-minute transaction, had literally been turned into a 15-20 minute ordeal. Having other things I needed to do, I left the store with my slightly-damaged Pokemon card, my CD, and a firm belief that Tower needs to do a lot more in PROPERLY TRAINING its people-- what my friend and I had "collected" was mainly FRUSTRATION rather than gift cards!...

NEW INFO: historical largest-denomination phonecard ($ 10,000)

In the past, I've noted some very high-denomination phonecards, such as a 400-minute AT&T one currently being offered for purchasing certain XEROX office machines; and the old $ 1,000 cards produced by The Score Board:

"Classic Assets I" from 12/94 (Moneycard catalog # S95-99, with 4 cards made for each of 5 players);

Assets Racing" (made for Finish Line) from 4/95 (# S147-151, with 20 made for each of the 6 different drivers); & "Classic Assets Gold" from 7/95 (# S266-270, with 4 cards made for each of 5 sports stars)...

Also: "Pro Line II" from 9/95 (# S432-435, with 4 cards made for each of the 4 NFL stars);

"Assets '96" from 12/95 (# S645-649, with an unannounced quantity made for each of 5 sports stars); Phone Pak I (for Finish Line) from 1/96 (# S307-310, with 25 cards done for each of the 4 racers); and "Classic Clear Assets" from 4/96 (# S859-863, with an unannounced number made for each of the 5 stars)...

And: the 6 different McDONALD'S cards from 5/96 (Moneycard # 1018-1022; only 9 of each card was seemingly made), plus the "Talk N' Sports" series from 4/97 (# S1403-1407, of which just 10 cards were made for each of the 5 players) ...

In addition, as of 3/95, Score Board released 4 each of 5 different "Classic Assets II" sports star cards denominated at $ 2,000 per card (S168-172, plus S171b which was overprinted for the Hawaii X card show).But, do you know what appears to be the HIGHEST-denomination regular-issue design card ever issued by a U.S. producer?... I've been doing some research, & here's the story of what appears to answer that

question:

At the end of 1993, (as detailed in the Moneycard Collector 1997 Catalog), a network marketing company called "GLOBALCOM 2000" was formed (as a division of "Universal Telecom"). The company supposedly held many "FIRSTS" in the prepaid card industry: the 1st round die-cut card; the 1st-ever "PROMOTIONAL" cards (# Pr2-8 for 7-Eleven in 11/93); the 1st Marilyn MONROE cards (the "Bernard of Hollywood" Series I-III, # 28-40P, released between 12/93 and 2/94); and the 1st AIDS-related cards (# 21a-26M from 2/94)...

There's one "1st" it probably wished it DIDN'T have: as the Catalog puts it, the company was "the first significant FAILURE of a prepaid card issuer in the U.S."...

After the firm's demise in early 1995, the original founder, Bruce Perlowin, attempted to "resurrect" the operation under the name of "ONE WORLD COMMUNICATIONS"-- appropriately enough, using a PHOENIX-BIRD design on their 9 listed cards (Page O-4 in the Catalog).

The book shows they issued "rising from the ashes" cards in 4/95 with denominations of $ 3, $ 5, $ 10, $ 15, $ 20, $ 30, $ 40, $ 50 and $ 100. But, I have learned they issued at least 2 other denominations NOT listed:

In April of '96, there was a $ 7 card released, using the same "Phoenix"-bird design and adding these words at the bottom of the front side: "Phone Card", and a WEB-site address (which currently is trying to sell a non-working URL web-site name "phonecard2000.com").

The back of the card claims that there were to be "100,000" cards issued, seemingly referring to what they call the "First Edition" (which I take to mean the Phoenix-bird design), and cards are individually numbered. There's also the statement (as best I can make it out), "Card expires 5-5-98".

While the card back boasts a rate of "33 cents" per minute, it also contains the following caution & ad: "Don't use this card for International calls; the rates are too high. However, our CallBack Service has the lowest rates in the world calling from foreign countries

'to' the U.S., and incredible rates when calling 'from' the U.S." (& they give a phone # for additional info).

The month before that dated card, the very same design was used for cards bearing the denomination "$ 10,000". Yes, you read that right-- $ 10,000!... On the back of the card (dated "March, 1996", with what optimistically appears to say "Exp.: 4-4-2000"), the producer repeats the basic wording from the $ 7 card detailed above.

When I questioned "why" a card would ever be issued with such a huge denomination, the owner (in a country outside the U.S.) stated that, the card was "exchanged for LEGAL services" performed for One World. In fact, the owner has 2 such individually-numbered $ 10,000 cards: one is "MINT" (with the scratch-off intact), while the other card was

partially USED (via removing the scratch-off to reveal the PIN #). However, after about $ 3,500 - $ 4,000 worth of service had been provided on the used card, One World "CUT [off] the service in the first 6 months."

How MANY such cards were issued by One World? The owner is not sure, but he feels that there were "just a few" actually-USED $ 10,000 cards ever existing... Were there any even-LARGER denominations made up to cover debts owed? It's hard to know at this point in time...

I'd never heard of the cards before the owner (-- who's basically willing to accept serious "BIDS" for the cards-- ) advised me of the existence of the one unused $ 7 card (# "1166") and the two $ 10,000 ones (including # "3424") detailed above.

But, if such "unknown" items have surfaced, who knows what OTHER fascinating "undiscovered" issues exist from various producers?!... I'm doing research on a $ 1 MILLION phonecard (issued as collateral for a loan), which I may be able to tell you about next time...

And, if any of you Folks out there have any INFO on other such "unrevealed" cards, I'd be pleased to see DETAILS about them!...

The LARGEST US PHONECARD SET -- TRACKING DOWN THE FACTS:

I am working to try to track down some facts concerning the LARGEST single issue ever done of phonecards. I am talking about the June, 1996 release of around 400 individual NFL football-player cards by Dallas-based SPORTSCALL (in affiliation with the Furst Group. Altho not listed, besides the $ 2 cards, there was also a "Promotional" $ 5 card made, of Troy Aikman).

You can see most of the $ 2 cards listed in the Moneycard Collector catalog (to which I was a contributor): # S7 thru S412 (on pages S-84 thru -92). There were supposedly 5,040 done of each card (licensed by Players, Inc., with boxes issued having 36 sealed packs of 4 cards each.

But, there were various ERRORS in the cards, with the same exact images being used on different card numbers: Todd Collins (S35) is both card # 294 and # 351; Jim Kelly (S40) is both card # 293 and 352; and S106, Darrin Smith (of the Dallas Cowboys), is both # 282 & 391; etc.

There are at least 4 player cards NOT listed in the catalog: # 72, E Guliford of the Carolina Panthers); # 77, K. Collins (also a Carolina Panther); # 382, Darren Carrington of the New England Patriots; and # 396, J. T. Thomas (WR the K.C. Chiefs; the book lists such a person as S342 under the St. Louis RAMS).

The big questions are, do certain listed cards REALLY EXIST, & was the listed quantity-issued really accurate for ALL the cards?-- For example: Does ANYONE actually HAVE cards # 62 or # 66, & can you verify WHO they picture (& their team)?... And, certain cards seem to be somewhat uncommon (& thus, are these possibly "short"-printed?): # 29, 57, 123, 156, 161, 165, 172, 176, 213, 252, 262, 263, 267, 283, 322, 342, 343, 364, 380 and 390.In advance, I THANK you for any information you can provide re the above...

Other NEWS:

On January 13-19, 2000, they will hold the INTERNATIONAL HOUSEWARES

SHOW at the McCormick Place convention center in Chicago. A special

limited-edition STORED-VALUE mag-striped card (showing the logo and name of

the Show) has been issued for the event by METRA, the Northeast Regional

Commuter Railroad Corp. The card (to be inserted in turnstiles) will give

holders a complimentary 7-day unlimited-rides train pass to the event.

PRESS RELEASES

Q Comm Offers Fix for Phone Card Fraud By Candace Talmadge

DALLAS (Reuters) - In a bid to offset slow revenue growth and stiffer competition in the $2 billion-plus U.S. market for prepaid phone cards, Q Comm International Inc.(QCCM.OB) is targeting a new market for its cards: the motel industry.

The Orem, Utah-based firm is also offering a technological fix for the fraud that has plagued the industry.

It has teamed with USP Communications of Salt Lake City, Utah, to start marketing prepaid phone cards to budget hotel and motel chains this month. As part of the package, Q Comm has developed a system called Q Express that permits hotel or store clerks to activate phone cards only after customers have paid for them.

``Our objective through 2000 is to be in the top 2 percent of prepaid telecommunications services providers in the number of distribution outlets,'' said Steve Flaherty, Q Comm president. ``We aim to create a very large conduit for selling prepaid phone cards and other telecommunications services to create multiple revenue streams ...''

Today's highly fragmented prepaid phone card market is entirely a distribution game, said Fred Voit, senior analyst, consumer communications at Boston-based market research firm Yankee Group. Voit estimated the total value of U.S. prepaid phone cards sold in 1999 at $2.1 billion. That number should rise to $2.5 billion in another 12 months, he said.

Phone companies and resellers that offer prepaid phone cards are always searching for new distribution channels, such as automated teller machines or lodging chains. Voit and Imke Mensah, an analyst with Boston-based telecommunications market research firm Atlantic-ACM, said targeting hotels and motels to distribute prepaid phone cards makes sense. The

product appeals to travelers and is one way of avoiding the frequently steep surcharges that lodging chains add to calls dialed from rooms.

However, other industry observers have doubts. Laurette Veres, president and chief executive officer of Quality Publishing Inc., said the main problem is getting prepaid cards into the lodging chains, which are very strict about what they accept. Veres' company, based in The Woodlands, Texas, publishes a monthly trade magazine, Intelecard News, that focuses on the prepaid phone card industry.

While Veres is aware of product tests by lodging chains, she said she does not know of any hotels or hotels actually selling prepaid phone cards.

Flaherty and Paul Hickey, chief executive officer of Q Comm, acknowledge that USP Communications does not yet have any lodging chain customers for the service, but also noted that it has not started to market it actively.

According to Veres, prepaid phone cards could be regarded as not in the lodging chains' best interests, since the product undermines the fees they already collect. ``I'm not sure the hotels will feel they need to care about losing business to prepaid phone cards,'' she said.

But Q Comm executives said the lodging chains are waking up to the fact that they have been losing business to prepaid cards and want a way to recoup some of those lost revenues.

Although the success of Q Comm's entry into lodging distribution is still up in the air, the company's point-of-sale activation systems gets high marks all around. POS activation of prepaid phone cards is a big advantage because it

provides much tighter inventory control, Atlantic-ACM's Mensah said.

She and Voit both said the prepaid phone card industry has suffered greatly from fraud involving ``live'' cards, which are on retail shelves with the value of the phone service already imprinted on them. Due to their small size, such cards have been easy targets for customer and employee theft.

Not only do prepaid card service providers have to contend with fraud, but rates also have been falling precipitously. Eighteen months ago, prepaid phone cards were charging as much as 25 cents per minute, Flaherty said. These days, the two most popular rate structures Q Comm sells with its POS system are a flat 9.9 cents a minute, and another rate of 2.5 cents per minute with a 79-cent connection fee for each call made with the card.

Connection fees and monthly charges have become more widespread as prepaid phone card rates have dropped, Veres noted. These changes, and increased use of prepaid cards by mainstream consumer groups, have prompted state lawmakers to mandate that prepaid phone card issuers fully disclose rate levels and all extra fees, as well as provide 24-hour

customer support. Constantly busy 800 numbers and nonfunctioning personal identification numbers, which are required to use the service, have been a problem, Hickey said.

Brand identity also is not very strong among prepaid card service providers. Instead, consumers identify more strongly with the retail outlet that sells them the cards, Hickey said. Q Comm produces its own in-store marketing material that it can customize for retailers, and spends almost no money for media, except on trade publications to recruit more distributors.

According to Competitive Media Reporting, a New York-based firm that tracks advertising spending, the top 20 prepaid phone card advertisers spent slightly less than $30.3 million on consumer media during 1998. That compared with the hundreds of millions of dollars that regular phone services spent.

PROMOTIONAL OFFERS

Montgomery Ward Offer

On 1-2-2000, in a MONTGOMERY WARD flyer distributed with the Sunday newspapers in Chicago, they advertised a phone card being available with a purchase: If you buy a JVC Hi-Fi stereo VCR (model HR-VP670U, Wards item # 2367003) for $ 129.99, via a mail-in rebate, you get a free "2 hour phone card" (which is not further described).

From: Jim Chudnow

Pet Smart

In the 12-26 Sunday newspaper supplement in Chicago, the PETSMART chain offered a 30-minute card to people buying various brands of premium pet food (8 pounds of cat food, or 20 pounds of dry dog food). A coupon was to be available at the checkout counter to

send in for the card, which pictures the face of the famous comics cat GARFIELD (a license that had previously been held by the ACMI group, and utilized in the past by an East Coast phonecard dealer for some specially-made designs).

From: Jim Chudnow

World Village Offer

Until Next Time,

Alan

Distribution

Phonecards On-Line© is published by Alan Cohen. It is a weekly newsletter devoted to phonecards - Current news, viewpoints, and reviews of new issues.

This newsletter is distributed free of charge, and available two ways.

1) On-Line on the World Wide Web. The address is: http://www.cardmall.com/pol - All back issues are archived at the web site.

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

If you wish to unsubscribe from POL, you need to send a message to the

following address: pol-request@coin-auctions.com

In the Body of the Message: address, just type UNSUBSCRIBE