On Monday, the Federal Communications Commission (FCC) and the Department of Justice (DOJ) announced that they have agreed to a $13.4 million settlement with TracFone Wireless over alleged abuses of FCC Lifeline program rules. TracFone sales agents purportedly signed up ineligible customers who did not qualify for low-income telecommunication services and the company never detected the issue.
Tracfone, recently acquired by Verizon, “provides wireless Lifeline service under the SafeLink Wireless brand to millions of low-income households nationwide,” according to the FCC. Notably, the company had troubles with the oversight agency in 2020 when it was fined $6 million for similarly violating Lifeline program eligibility rules.
The press release explained that the FCC and DOJ accused TracFone of violating the False Claims Act by signing up more than 175,000 ineligible Lifeline program customers during 2012-2015. The Middle District of Florida qui tam action further alleged that the false claims resulted from TracFone’s lax oversight and monitoring.
In particular, an investigation by the FCC Office of Inspector General showed that Miami, Florida-based TracFone’s sales agents exploited a loophole in the company’s process for verifying Lifeline eligibility. In so doing, the company signed up “non-low income veterans, Medicare patients, law enforcement, and other people who did not qualify for the Lifeline program,” fraudulently drawing money from federal funds intended to serve those truly in need.
As a result of the parties’ settlement, the Universal Service Fund will retain approximately $10.9 million in previously refunded overpayments and TracFone will pay an additional $2.5 million in damages. As injunctive relief, the wireless carrier has agreed to a comprehensive three-year compliance plan to prevent further transgression of the Lifeline program.