FCC to fine Total Call Mobile record $51M for defrauding Lifeline program

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Detailing a litany of blatant, widespread and systematic abuses, the FCC late yesterday announced its intention to fine wireless provider Total Call Mobile some $51 million for allegedly creating tens of thousands of phony Lifeline accounts that defrauded the Universal Service Fund of almost $10 million.

The fine would be the largest ever levied against a Lifeline provider, according to the FCC.    

The Lifeline program, established in 1996, provides discounted and free landline and mobile phone service to low-income consumers. Derided as “Obama phones,” the program has been controversial and plagued by fraud.

“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.”

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Here are some of the details of the alleged abuse, which the FCC press release says the company knew of as early as November 2013:

  • During the fourth quarter of 2014, 99.8 percent of Total Call’s enrollments nationwide involved overriding the third-party verification system designed to catch duplicate enrollments.
  • Sales agents shared eligibility documents, such as Supplemental Nutrition Assistance Program (SNAP) cards, in order to use the documents to conduct multiple enrollments.
  • As early as May 2014, employees told Total Call management that they were aware of increasing instances of eligibility fraud, such as the repeated use of single SNAP cards with no name or other identifying information to enroll ineligible or duplicate consumers.  Despite this, no meaningful changes to employee training or verification procedures were made.
  • One sales agent used the identification from a stolen wallet to register 10 Lifeline cell phones in the name of the wallet’s owner without his/her permission. When that agent was arrested and charged with identity theft, he/she possessed not only the wallet but 12 additional Total Call-issued Lifeline cell phones.

The FCC just recently voted by a 3-2 party-line majority to include subsidies for broadband Internet services in Lifeline. 

Expansion of the 20-year-old program to cover cell phones in 2008 attracted a host of service providers to service that segment of the market. It also spawned a number of nongovernmental websites, including Free Government Cell Phones, that are devoted to monitoring the program.

That website published a story on March 31 with the headline: Fraud, fraud and more fraud: Hawaiian jury convicts president of free government cell phone company. It also has a summary of the program’s history and the disputes that have swirled around it.

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