The FCC’s Lifeline program, which provides subsidized phone and wireless service for the poor, was created by the Reagan administration in 1985 and expanded by Bush in 2005. The problem is that for around twenty years the FCC did a relatively awful job tracking how Lifeline funding was spent, which let both carriers and recipients game the system, potentially to the tune of billions of dollars. With the FCC working on expanding that program to cover broadband the FCC is finally working on cracking down on that fraud.
In 2013 a group of smaller companies were fined $14.4 million for collecting money for duplicate accounts. Last year, AT&T was fined $10.4 million for failing to audit its Lifeline roster rolls, purportedly to collect money the company wasn’t owed.
Now the FCC says it’s levied its biggest fine yet for Lifeline fraud and abuse. An FCC announcement (pdf) states the FCC has fined Total Call Mobile $51,070,322 for enrolling tens of thousands of duplicate and ineligible consumers into the Lifeline program. The FCC states that Total Call Mobile collected an estimated $9.7 million dollars in improper payments from the Universal Service Fund for duplicate or ineligible consumers “despite repeated and explicit warnings from its own employees” and some compliance specialists.
Why didn’t Total Call Mobile care about warnings that it was engaged in fraud? Because a large number of other companies were doing the same thing, and again, the FCC wasn’t policing the subsidy program. That’s clearly changing.
We reserve the strongest sanctions for those who defraud or abuse federal programs, said Enforcement Bureau Chief Travis LeBlanc. Any waste, fraud, or abuse in the Lifeline program diverts scarce funds from the consumers they are meant to serve and undermines the public s trust in the program and its stewardship.