Lycatel targets expats and ethnic communities for its pre-paid cards
The pre-paid phone card company Lycatel is being investigated by the telecoms regulator Ofcom.
Lycatel has been accused of levying hidden charges on its card users and giving them fewer call minutes than they have paid for.
The company is one of the biggest in the business and sells its international calling cards in 16 countries.
If it is found guilty it could be fined up to 10% of its turnover.
A spokeswoman for Ofcom said it had launched the investigation after complaints were channelled to it from Consumer Direct and trading standards officers in Tower Hamlets and Suffolk.
Millions of people in the UK use the cards to phone people abroad and they are particularly popular with immigrants wishing to phone home.
Ofcom said it was investigating whether or not Lycatel had broken the Ofcom rules, which could lead to a fine, or if the firm had broken contract or consumer laws which could lean to enforcement action through the courts.
In a statement, the company said it would be "be communicating with Ofcom to deal with their concerns and satisfy them that Lycatel continues to offer UK consumers the value and quality for which we are renowned".
Pre-paid phone cards are widely sold in shops and newsagents in denominations of £5, £10, and £20 and they let the user make cheap international calls.
The cards work by giving the buyer a Pin number which is revealed by scratching the back of the card and which in turn lets them use the service once they have called the Lycatel access number.