Consumer watchdog group urges FCC to crack down harder on Lifeline abusers

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The GAO said last month that the FCC must do more to prevent fraud and abuse of the Lifeline program.

The San Francisco-based watchdog group Consumer Action urged the FCC to continue going after service providers and consumers who abuse the government’s Lifeline program.

The U.S. Government Accountability Office last month issued a report on Lifeline, saying more action was needed to address crucial vulnerabilities in several areas.  

“For example, Lifeline’s structure relies on over 2,000 Eligible Telecommunication Carriers to implement key program functions, such as verifying subscriber eligibility,” the GAO reported. “This complex internal control environment is susceptible to risk of fraud, waste and abuse as companies may have financial incentives to enroll as many customers as possible.”

The GAO said it couldn’t confirm whether 36% of the Lifeline users it reviewed qualified for the service, and it said the FCC’s Universal Service Fund—which essentially pays for the program—has assets in excess of $9 billion in a private bank account rather than an account managed by the U.S. Treasury. That policy is not only financially risky, the GAO reported, it prevents the FCC from managing the funds as effectively as it could otherwise.

Lifeline, which launched during the Reagan administration and was expanded to include mobile phones in 2005, provides discounted service to low-income consumers. It offers a $9.25 monthly discount on broadband or phone services for users near or beneath the poverty line, and the program expanded gradually under the Obama administration. But earlier this year, new FCC Chairman Ajit Pai directed the agency (PDF) to eliminate the federal approval process for Lifeline service providers, effectively returning those processes to the state level.

The program has been plagued with fraud and abuse for years, and service providers—including some of the biggest U.S. carriers—were forced to shed Lifeline users after the FCC implemented stricter policies for recipients in 2012.

Consumer Action—which says it “empowers underrepresented consumers nationwide to assert their rights”—noted that a significant portion of the GAO’s investigation took place before the FCC adopted reforms more recently. But more work is needed, the group said.

“The Lifeline program is of vital importance to millions of America’s low-income seniors, veterans and limited-English speakers. It is unfortunate that certain carriers and consumers are violating the existing rules that govern the Lifeline program,” Consumer Action Executive Director Ken McEldowney said Thursday in a prepared statement. “We urge the Federal Communications Commission to take reasonable additional steps to crack down on remaining ‘bad actors’ and effectively curb their abuses. We don’t want to make it harder for people who need Lifeline help to get it.”