Sprint Busted For Allegedly Defrauding The FCC Lifeline Program

from the whoops-a-daisy dept

For years, big cellular carriers have been busted defrauding the FCC Lifeline program, a fund that's supposed to help subsidize telecom connectivity for low income users. Started by Reagan and expanded by Bush, the fairly modest program doles out a measly $9.25 per month subsidy that low-income homes can use to help pay a tiny fraction of their wireless, phone, or broadband bills (enrolled participants have to chose one). While the program (which you pay into via your telecom bills) has been a subject of fraud, the agency has done some solid work under both parties trying to rein in abuse of the program.

This week, the Pai FCC brought the hammer down on Sprint, alleging that the company has been collecting monthly subsidies for roughly 885,000 Lifeline customers who were no longer actually using the company's services. From the FCC announcement (pdf):

"The Federal Communications Commission has learned that Sprint Corp. claimed monthly subsidies for serving approximately 885,000 Lifeline subscribers, even though those subscribers were not using the service. That would be a violation of a key rule—the “non-usage” rule—designed to prevent waste, fraud, and abuse in the Lifeline program. The 885,000 subscribers represent nearly 30% of Sprint’s Lifeline subscriber base and nearly 10% of the entire Lifeline program’s subscriber base.

These kinds of "errors" aren't uncommon in the subsidy-slathered telecom sector. AT&T was forced to pay $11 million in 2015 by the previous, Tom Wheeler FCC because it "forgot" to remove nonexistent subsidy recipients from its rolls. In this case, the Pai FCC makes it clear the discovery will lead to a broader investigation and at least some kind of fine for Sprint, which has been working overtime to gain approval for its $29 billion merger with T-Mobile.

Historically, the Lifeline program has seen pretty broad, bipartisan support. After improving reporting requirements to thwart fraud, the FCC under Tom Wheeler slightly expanded the program to include broadband. Pai voted that expansion down, and has been criticized for slowly attempting to kneecap the program. The courts however have argued that a number of Pai's efforts to hamstring the program (like taking away subsidies from tribal residents) haven't been supported by factual evidence.

To be clear, this is a good move by Pai. That said, Pai has been a bit discordant on this subject. He'll profess his top priority is "closing the digital divide," but will then either ignore issues at the root of the problem (limited broadband competition, high prices), or attempt to scale back programs like Lifeline that actually attempt to do something about it. With Sprint, Pai is back again insisting that Lifeline is something important that needs protecting, something his policy proposals don't always reflect given his numerous attempts to neuter the program:

"Lifeline is an important component of our efforts to bring digital opportunity to low-income Americans, and stopping waste, fraud, and abuse in the program has been a top priority of mine since I’ve been at the Commission,” Chairman Pai said. “It’s outrageous that a company would claim millions of taxpayer dollars for doing nothing. 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."

Despite Pai's wishy washy positioning on whether we should help poor people get and stay connected, the crackdown is welcome and long overdue. That said, the fact that Sprint was likely defrauding the government isn't likely to change the FCC's decision to approve the Sprint T-Mobile merger; consolidation consumer groups say will only amplify many of the pricing and competition problems that make telecom services expensive for low-income users in the first place.

Filed Under: fcc, fraud, lifeline
Companies: sprint


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  • icon
    DannyB (profile), 27 Sep 2019 @ 6:39am

    A slap on the wrist

    Sprint will need to look quite contrite. Keep snickering to a minimum. And apologize.

    Sprint is deeply sorry that it got caught doing this. Sprint promises that going forward Sprint will not be caught doing anything like this ever again.

    Sprint would like to apologize especially to any individuals within Sprint who suffered personal embarrassment due to their participation in these crimes.

    To all of those who were harmed by Sprint's thoughtless, selfish, and criminal actions, Sprint would like to offer its sincerest indifference.

    reply to this | link to this | view in chronology ]

    • icon
      murgatroyd (profile), 27 Sep 2019 @ 7:45am

      Re: A slap on the wrist

      Sprint sounds a lot like Smeagol, doesn't it?

      reply to this | link to this | view in chronology ]

    • identicon
      Earlene McCain, 29 Sep 2019 @ 2:19pm

      Re: A slap on the wrist

      AS AN ASSURANCE WIRELESS/VIRGIN MOBILE (now SPRINT) CUSTOMER, SINCE MAY OF 2017, I CAN ADD A BIT OF INFORMATION FOR SORINT'S OWN INVESTIGATORS FOR FRAUDULANT ACTIVITIES VIA LIFELINE SERVICES. IT APPEARS THAT MY LOST(STOLEN) CELL CAME BACK AFTER 5 -7 DAYS. ONLY TO HAVE 4 EXACT SAME CELL MANUFACTURER PHONES IN MY. ACCOUNT. SO THES3 PHONE HIJACKERS (WHO CAN GET THEIR OWN LIFELINE ACCOUNT, NOW USE MY SERVICE. THIS MEANS SPRINT IS LOSING APPROXIMATELY 180.00 TO 300.00 (3 EXTRA PHONES VIA MY LIFELINE ACCOUNT.) THIS IS MY OWN VALID RESEARCH , AND I HAVE SOURCES AND FACTS THAT CAN BACK UP MY OWN STATEMENTS. I AM TRULY GRATEFUL FOR THE LIFELINE PROGRAM. AND GIOE YOU CAN HELO STOP FRAUD AS WELL AS RHE ID3NTY THIEVES WHO HAVE CAUSED MY PRESENT SITUATION. I WISH THE GUILTY PARTIES THE BEST IN MAKING RIGHT THE WRONG DOINGS WHO HURT MY GOOD NAME. AND TAKE AWAY RHE PEIVELAGE FROM THE GUILTY PARTIES WHEN THEY ABUSE THE PRIVELAGE. SINCERELY. EARLENE K. McCAIN, Newberg, Ore. 971 294-7612 ekaymccain@gmail.com

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 27 Sep 2019 @ 6:45am

    If I remember how to feed math equations into my computer: That works out to over $8,000,000/month.

    reply to this | link to this | view in chronology ]

    • icon
      JoeCool (profile), 27 Sep 2019 @ 11:16am

      Re:

      So they'll probably get a $500K fine, knowing the way these things go.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 28 Sep 2019 @ 8:45am

      Re: Adjusted Computation

      Just a tiny-tiney adjustment. There is this thing called the False Claims Act, which in part provides for Triple Damages. So at the end just add ' 3 x 8,000,000 = '.

      But wait, there's more!

      Government procurement procedures have a really nice thing called 'Suspension or Debarrment'. If your hand is in the cookie jar, the gov't can refuse to do business. And the way it works, is, it ANY part of the Gov't yells Thief, the WHOLE Government freezes you out. It's a consolidated list type thingy.

      Hope this makes you feel at least three times better!

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 27 Sep 2019 @ 6:50am

    Old people aren't using it daily

    This program provided free cell phones to poor people. Many of those people were elderly and used the phones as an emergency only things. They would only use it once a year or so. Before the program changed its rules, that was allowed, after it changed, 15 days was long enough to start shutting down the numbers assigned to those phones. I'm sure that most of the numbers were never used by anyone, but a good percentage were probably disappointed when they tried to use the phone and it no longer worked.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 27 Sep 2019 @ 10:20am

      Re: Old people aren't using it daily

      Many of those people were elderly and used the phones as an emergency only things.

      If that means 9-1-1 only, no service plan is required. Any cellphone that's compatible with the network will still work.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 28 Sep 2019 @ 3:36am

        Re: Re: Old people aren't using it daily

        For an elderly person, an emergency may be that they need to phone a neighbour because they kicked their zimmer away, and need someone to bring it to them so that they can get out of their chair, or they find out why a carer has not arrived etc.

        reply to this | link to this | view in chronology ]

  • identicon
    Pref Anon, 27 Sep 2019 @ 7:19am

    You missed the best part, Karl

    The kneecapping you mention floated a reseller ban, on the grounds that without actual facilities, the resellers would just engage in fraud.

    In a lot of the country, that would leave Sprint as the only mobile lifeline provider.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 27 Sep 2019 @ 8:20am

    out_of_the_blue isn't going to like this, is he?

    reply to this | link to this | view in chronology ]

  • icon
    ECA (profile), 27 Sep 2019 @ 10:15am

    FOR HOW LONG?>?>?

    If you tell me how long this has been happening...
    And if the other corps are doing it also(or quickly RE-installing it)

    I will tell you the Agency responsible for NOT DOING ITS JOB..

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 27 Sep 2019 @ 10:57am

    Good goal, bad implementation. I'd rather see the Lifeline program rendered unnecessary by driving the service price down to a level that the current beneficiaries can comfortably afford it out of pocket. Per the article, this program hands out $9.25/month to the beneficiary. Drive the price down by $10 and you can close Lifeline (saving all its administrative expenses), the current beneficiaries come out $0.75 ahead (plus saving all the overhead they incur entering/remaining in the program), and non-beneficiary customers (people who could sign up, but haven't, and people who aren't eligible to sign up) come out $10 ahead. Yes, the telecom companies could raise their prices, but that's already a problem - and they're already doing that as fast as they think they can get away with it.

    reply to this | link to this | view in chronology ]

    • icon
      ECA (profile), 27 Sep 2019 @ 6:00pm

      Re:

      Fun part..
      If they removed all the Taxes and surcharges...Including the real ones...
      That $10 would be gone.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 30 Sep 2019 @ 6:54am

      Re: $9.95 will pay for (minimum) phone service

      Yes this is late, and I'm not a shill. AC
      I use a cheap TracFone at the minimum number of minutes required. This works out to less than $8.00 per month. Thus the Lifeline subsidy could completely cover a minimum use phone.
      I certainly don't recommend TracFone. The service is only so-so, the phone in use is not a smart phone, customer service leaves much to be desired. However, for low utilization, basic communication by someone who doesn't need CS, the price can't be beat.
      That the LifeLine service can't/won't pay for such a service (and save money) is a failure of government sense/diligence.

      reply to this | link to this | view in chronology ]

      • icon
        ECA (profile), 1 Oct 2019 @ 10:28am

        Re: Re: $9.95 will pay for (minimum) phone service

        Love that low cost.
        What is funny is they give you Data and phone..
        But use a smart phone and you pay double.

        reply to this | link to this | view in chronology ]

  • icon
    Bt Garner (profile), 28 Sep 2019 @ 10:18am

    So, what will this surcharge be labelled as on my Sprint Bill? Lifeline Recovery Fee?

    reply to this | link to this | view in chronology ]


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