FCC: Lifeline Program Fraud and Abuse Surpasses Two Million Subscribers

    In a continuing crackdown on the federal government's Lifeline program, commonly known as "Obama phones", the Federal Communications Commission (FCC) has revealed that fraud and abuse in the program exceeded two million subscribers.  New rules were established after it became clear that subscribers and providers were taking advantage of the system:

The FCC’s Enforcement Bureau has worked aggressively to enforce these new rules since their adoption, taking actions worth over $15 million, in addition to today’s $32.6 million in proposed forfeitures. Numerous additional investigations are ongoing. Moreover, over 2 million duplicate subscriptions have been eliminated, and the FCC’s reforms are on track to save the Fund more $2 billion over three years.

    The two million is up from a figure of 1.1 million in an FCC press release just a month ago.
    The Lifeline program was started in 1985 to allow low income household to have basic and emergency phone service, but has grown dramatically since its inception.  The Wall Street Journal reported in February that payments ballooned from $819 million in 2008 to more than $2.2 billion in 2012.  The Journal investigation also found that the kind of fraud uncovered by the FCC in its current action was rampant:

A review of five top recipients of Lifeline support conducted by the FCC for the Journal showed that 41% [almost 2.5 million] of their more than six million subscribers either couldn't demonstrate their eligibility or didn't respond to requests for certification.

    The purpose of the November 1 press release was to announce that the FCC has proposed fines of $32.6 million against three providers for rules violations.  The FCC is accusing Conexions Wireless, i-wireless, and True Wireless of knowingly allowing multiple Lifeline subscriptions from the same household when the limit is one per household.  Service providers may request reimbursement from the government under the program on the condition that they have verified eligibility of their subscribers under Lifeline rules.  One of the companies, Conexions Wireless, also faces a $300,000 fine for "apparent willful and repeated failure to provide timely and complete responses to the FCC’s requests for information."
     The total proposed forfeitures against providers to date amount to a relatively small $47.6 million versus the apparent billions in fraud.  An email to the FCC requesting clarification regarding further actions possibly pending against providers has not yet been returned.


Note: A version of this article first appeared at The Weekly Standard.