FCC to fine Total Call Mobile a record $51M for alleged Lifeline fraud

The FCC announced plans to fine a wireless services provider a record $51 million for allegedly fraudulently enrolling tens of thousands of users into the Lifeline program in a move that underscores a problem that has plagued the government's program for years.

The FCC accused Total Call Mobile, a California-based services provider, of enrolling "tens of thousands of duplicate consumers" in the program. The Commission said 99.8 percent of Total Call's enrollments nationwide "involved overriding the third-party verification system designed to catch duplicate enrollments."

Employees told company management that they were aware of increasing instances of eligibility fraud, the Commission said, but Total Call took no substantial steps to change its training or verification procedures.

Lifeline provides monthly phone subsidies to roughly 18 million people eligible for food stamps and Medicaid. The program launched during the Reagan administration and was expanded in 2005 to include mobile phones.

The government provides a monthly subsidy of $9.25 per month to service providers for each Lifeline subscriber they enroll. Companies are required to pass the discount on to their customers.

Total Call didn't immediately respond to a request for comment from FierceWireless.

"We reserve the strongest sanctions for those who defraud or abuse federal programs," FCC Enforcement Bureau Chief Travis LeBlanc said in prepared remarks. "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."

Commissioner Ajit Pai opposed the FCC's move, however, noting that the fine is "not even a third more" than the roughly $39 million Total Call received from the Universal Service Fund since its practices were discovered by the Universal Service Administrative Company.

"I agree with my colleagues that Total Call Mobile apparently and repeatedly violated federal law," Pai said in a statement. "And I appreciate that my colleagues acceded to my request that we order Total Call Mobile to explain why we should not suspend all Lifeline payments to the company, revoke its ability to participate in the Lifeline program, and end its authorization to offer telephone service entirely.

"But I am disappointed that we do not -- and to some extent cannot -- sanction Total Call Mobile for all of its wrongful conduct," Pai continued. "That's hardly the type of justice the American people deserve given the sheer magnitude of misconduct at issue, and I accordingly dissent in part."

The FCC last week moved to create a new third-party verification system to prevent fraud when it voted to expand the Lifeline program to include broadband internet service.

For more:
- see this FCC notice (PDF)

Related articles:
During heated meeting, FCC votes to expand Lifeline to cover mobile Internet services
Sprint says broadband co-pays kill Lifeline participation
AT&T continues to push Lifeline proposal, wants FCC to include Internet services in program

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