FCC Floats $6M TracFone Lifeline Fine; Senators Seek More Such ISP Services

“Ensuring that this program works for those who need it most is especially important" during the COVID-19 pandemic, said Chairman Ajit Pai. He hopes a new prohibition on carriers paying commissions based on how many such customers sign up "will help deter the kind of apparent fraud we’ve seen in this case.”

TracFone sales agents "apparently manipulated the eligibility information of existing subscribers to create and enroll fictitious subscriber accounts," the NAL said. Seven Florida customers at different addresses used the same name, July 1978 birth date and last four Social Security digits, it said. The investigation also found apparent wrongdoing in Texas. The proposed fine "is based on the 5,738 apparently improper claims for funding that TracFone made in June 2018 and includes an upward adjustment in light of the company’s egregious conduct in Florida," the agency said.

Commissioner Geoffrey Starks deems the proposed penalty "appropriate, and particularly that the upward adjustment with regard to TracFone’s Florida conduct is warranted in light of the apparent deception the Commission’s investigation uncovered. Though that apparent fraud was egregious, it occurred before the new National Verifier and its tools for detecting these types of fraud were in place in Florida." During this "crisis, the FCC should be expanding Lifeline’s reach and scope, including better promoting the program," he wrote.

"Get to the bottom of what transpired here in order to make sure that it does not happen again," Commissioner Jessica Rosenworcel said. She and Starks sought a larger discussion on Lifeline to ensure no one is left behind without communications.

The company is reviewing the NAL and will respond, a spokesperson emailed. "We take seriously our stewardship of public dollars." The provider recognizes it's "a difficult time for everyone" and "we're here to support you," it responded to our tweeted news of the proposed penalty. "Our team is continuously working on potential solutions to offer some support to as many of our customers as possible." The company directed us to its website on the virus, which includes information that "TracFone has partnered with SafeLink Wireless to offer assistance for income eligible, if you are a participant in Snap or Medicaid you could qualify."

“During this public health crisis, it is imperative that internet providers, like your company, act to ensure that the millions of American families who depend on the Lifeline program are not left behind by an ever-growing digital divide,” Wyden and the other senators wrote the ISPs. Basic Lifeline wireless service provides 3 GB of data per month, which isn't enough for telework and telehealth services, they said. The lawmakers noted many Lifeline providers also don't enable Wi-Fi hot spot capabilities. They want the companies to ensure Lifeline subscribers have access to 4G service where available, allow consumers to roll over some or all of their monthly voice and data allowances from one month to the next, and provide no-cost upgrades to Lifeline subscribers using smartphones that don’t have hotspot functionality.

The other companies that received the letter are: Airvoice Wireless, American Broadband and Telecommunications, Amerimex Communications, Assist Wireless, Boomerang Wireless, Cellular One, Cintex Wireless, Global Connection, I-Wireless, Q-Link Wireless, Sage Telecom Communications, TAG Mobile, Telrite, Tempo Telecom, TerraCom, TruConnect Communications, True Wireless, U.S. Cellular, Virgin Mobile and Yourtel.

They didn’t comment.