The FCC on Tuesday revealed that Sprint falsely collected “tens of millions” in subsidies from the government’s Lifeline program, with the carrier getting paid for 885,000 subscribers even though they were inactive and not using the service.
The Lifeline program is meant to make phone and internet service available for low-income consumers, but has been riddled with fraud and abuse. FCC Chairman Ajit Pai called Sprint’s actions “outrageous.”
Participating providers on average receive a $9.25 monthly subsidy for each Lifeline subscriber, which is supposed to be passed on to the customer, making the service free to consumers.
In Sprint’s case, the carrier was falsely collecting taxpayer dollars for consumers that it did not actually provide services to and who did not use any voice minutes or data. The 885,000 inactive Lifeline customers Sprint claimed and was getting paid for represent a whopping 30% of Sprint’s Lifeline subscriber base and a full 10% of the entire Lifeline program’s subscribers, according to the FCC.
“It’s outrageous that a company would claim millions of taxpayer dollars for doing nothing,” Pai said in a statement. “This shows a careless disregard for program rules and American taxpayers. I have asked our Enforcement Bureau to investigate this matter to determine the full extent of the problem and to propose an appropriate remedy.”
Sprint’s abuse was uncovered by an investigation by the Oregon Public Utility Commission, and the FCC said the carrier’s action violates the Lifeline program’s key “non-usage” rule, which is meant to prevent waste, fraud and abuse.
Exactly what Sprint’s punishment will be remains to be seen. In 2018 the FCC proposed a $63 million fine against wireless reseller American Broadband & Telecommunications for claiming funding for more than 42,000 ineligible Lifeline accounts in one month.
Abuse of the program, where carriers enroll duplicate or non-existent subscribers, or like Sprint submit claims for individuals not using their Lifeline service, is not a new problem. According to the FCC, the Lifeline program has an improper payment rate of 18.5%.
In August Pai circulated a draft order with the aim to strengthen the program’s enrollment and reimbursement verification. The FCC’s Office of Inspector General in April found that a significant portion of fraud happened during the subscriber enrollment process.
The Government Accountability Office (GAO) in 2017 was unable to confirm the eligibility of about 36% of Lifeline subscribers, or 1.2 million individuals, that it reviewed.
In 2013 major carriers were required to shed a significant number of Lifeline subscribers after stricter policies were implemented by the FCC in 2012.