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TracFone Fined $6m For Violating Lifeline Program Rules

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The Federal Communications Commission (FCC) fined TracFone Wireless $6 million for violating the rules of the Lifeline program, which provides discounted telecommunication services to low-income Americans. TracFone is a prepaid wireless carrier participating in the Lifeline program through SafeLink Wireless.

Participating carriers receive funds for Lifeline subscribers, which they use to reduce the cost to those customers. The FCC alleged the TracFone “claimed federal Lifeline funding for customers who were not actually determined to be eligible for the program, which helps make communications services more affordable for low-income Americans.” TracFone made claims on behalf of 5,738 customers in June 2018.

After investigating, the FCC found that in 2018 TracFone “sought and obtained federal Lifeline support for hundreds of ineligible subscribers in Florida.” TracFone salespersons are compensated for new enrollments via commissions, this incentive led to exploiting the eligibility information of current subscribers to create and enroll fake subscribers. The FCC alleged that TracFone “claimed support for seven customers in Florida at different addresses using the same name, all seven of whom had birth dates in July 1978 and shared the same last four Social Security Number digits.” Additionally, in 2018 TracFone sought funds for thousands of ineligible Texas subscribers by claiming more Lifeline support than allowed by the Public Utility Commission of Texas, which determined subscriber eligibility for the state.

“Every dollar misdirected from the Lifeline program to a carrier that violates our rules is a dollar that won’t go toward providing more affordable connectivity to low-income Americans,” FCC Chairman Ajit Pai said. “Ensuring that this program works for those who need it most is especially important now, during the ongoing coronavirus (COVID-19) pandemic. So we’ll continue to root out waste, fraud, and abuse in Lifeline, which is paid for by American taxpayers. And with today’s Notice of Apparent Liability, we do exactly that. We make clear that we will not sit idly by and let Lifeline carriers fabricate enrollment data to generate more sales. And I’m hopeful that our new rule prohibiting carriers from paying commissions to employees or sales agents based on the number of Lifeline customers they sign up will help deter the kind of apparent fraud we’ve seen in this case.”

TracFone will have an opportunity to respond to the allegations, after which the FCC will use for consideration for its further actions in the matters.

The FCC’s move comes after it was urged to expand the Lifeline program in light of the coronavirus pandemic. The FCC was asked to allow Lifeline recipients to have unlimited calls and texts, as well as a subsidized data plan. The FCC had already waived Lifeline restrictions as part of the Keep America Connected Initiative to help recipients during the pandemic. While the FCC wants to expand Lifeline for those who need it, the allegations against TracFone take advantage of this funding.

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