Carrier Must Pay $51M For Allegedly Defrauding Lifeline Program

Image courtesy of Linda Flores

The Federal Communications Commission plans to fine Total Call Mobile $51.1 million after alleging the carrier fraudulently collected payments from a program that subsidizes wireless service for low-income consumers. 

The Commission announced its intention to fine Total Call Mobile on Friday accusing the company of using “widespread enrollment fraud” to collect nearly $10 million in payments from the Lifeline program.

The Lifeline program, part of the Universal Service Fund, is paid for through surcharges on phone bills and aims to provide discounted phone service to people with low incomes so that they have access to the communications tools necessary to connect with jobs, family, and emergency services.

According to FCC documents [PDF], since 2014 Total Call Mobile requested and received more than $9.7 million in payments by signing up tens of thousands of duplicate or ineligible consumers “despite repeated and explicit warnings from its own employees, in some cases compliance specialists, that company sales agents were engaged in widespread enrollment fraud.”

Under the current Lifeline program rules, eligible telecommunications carriers — like Total Call Mobile — receive $9.25 per month for each qualifying low-income consumer receiving phone service. These providers can seek reimbursement for providing services to a consumer after confirming their eligibility and that the consumer is not already receiving Lifeline service.

Total Call Mobile provides Lifeline service in at least 19 states and territories. The Commission says the proposed fine is the largest ever filed against a Lifeline provider.

The action against Total Call Mobile was initiated after the FCC’s Universal Service Fund Strike Force conducted the investigation of the California-based company.

Investigators found, among other things, that Total Call Mobile’s sales agents enrolled tens of thousands of duplicate consumers by making slight changes to a consumer’s identifying information.

Agents also enrolled ineligible customers by using documents, such as temporary Supplemental Nutrition Assistance Program (SNAP) cards, which contained no identifying information. These cards were allegedly used to enroll multiple ineligible consumers and collect government subsidies.

In one case, the investigators allege a sale agent used identification from a stolen wallet to register 10 Lifeline cell phones in the name of the wallet’s owner without his/her permission. When that agent was arrested and charged with identity theft, they possessed not only the wallet, but 12 additional Total Call issued Lifeline cell phones.

While Lifeline providers are required to ensure their employees do not commit fraud within the program, the investigation alleges Total Call Mobile did not follow that mandate.

The FCC claims that Total Call Mobile was aware of systematic problems related to duplicate enrollments since at least Nov. 2013, but failed to address the issue.

Additionally, the FCC says that in May 2014 employees told Total Call management that they were aware of increasing instances of eligibility fraud, such as the repeated use of single SNAP cards with no name or other identifying information to enroll ineligible or duplicate consumers.

“We reserve the strongest sanctions for those who defraud or abuse federal programs,” Enforcement Bureau Chief Travis LeBlanc, said in a statement. “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.”

In addition to fining Total Call Mobile, the FCC says it will consider banning the carrier from participating in the Lifeline program.