Getty Images | Jozef Polc | 500px
TracFone Wireless faces a $ 6 million fine for allegedly defrauding a government program that offers discount telecommunications services to poor people.
The Federal Communications Commission yesterday proposed to fine TracFone, saying the prepaid carrier had received FCC Lifeline funding by "registering fictitious subscriber accounts." TracFone wrongly sought and received more than $ 1 million from Lifeline, the FCC said.
The FCC press release states:
TracFone's sales force, who appeared to be compensated for new sign-up commissions, appeared to manipulate existing subscriber credentials to create and register fictitious subscriber accounts. For example, TracFone requested support for seven Florida customers at different addresses with the same name, all seven of whom were born in July 1978 and had the same last four digits of the social security number. The Enforcement Bureau's investigation also found that TracFone apparently requested reimbursement for thousands of ineligible subscribers in Texas in 2018.
The fine proposed today is based on the 5,738 seemingly inappropriate funding claims that TracFone made in June 2018, and includes an upward correction given the company's tremendous behavior in Florida.
The FCC's Lifeline program, which Americans pay for telephone bills, provides monthly subsidies of up to $ 9.25 per household for telephone and broadband services provided to eligible low-income subscribers.
Ajit Pai, chairman of the FCC, said the commission would "not watch idly and have lifeline carriers fabricate registration data to generate more sales." Pai also said he was "confident that our new rule, which prohibits carriers from paying commissions to employees or sales representatives based on the number of Lifeline customers they sign up, will help to resolve the type of obvious fraud prevent that we saw in this case. "
The $ 6 million fine was proposed in an Obvious Liability Notice (NAL). TracFone will be given the opportunity to respond to the FCC's claims to reduce or eliminate the proposed fine. The process could result in an FCC agreement or vote to impose a final punishment without TracFone's consent. The FCC has poor records of the proposed fines.
TracFone said it will respond "at the right time" and "we take our public dollar administration seriously and will continue to focus on connecting millions of low-income customers to school, work, healthcare and essential social services," Reuters.
TracFone returned $ 1.2 million
According to NAL, "TracFone admitted that its sales staff … had not properly subscribed to Florida subscribers to the Lifeline program."
In Florida, TracFone internally investigated allegations made by the Universal Service Administrative Company (USAC), which Lifeline manages on behalf of the FCC, and found that several agents had found a way to misuse the information of family members of Lifeline participants in order to make other registration requests to fill . "The NAL continued:
These agents appear to have changed parts of their relatives' beneficiary data, e.g. B. single digits of the date of birth or social security numbers. The agents apparently used the relatives' identification information to enroll multiple members of the same household and generate additional sales. And TracFone has apparently compensated its Lifeline sales staff for the relevant period by paying a commission for new registrations. The agents apparently made money making the new signups, and TracFone benefited from receiving Lifeline support by making claims for them.
The USAC also found that "TracFone received federal lifeline payments for thousands more Texas subscribers per month in 2018 than was approved by the state's LIDA (Low-Income Discount Administrator) in seven out of seven years Months beginning in June 2018, "TracFone appears to have made 24,809 Lifeline support claims … without first receiving either (1) proper Texas income eligibility rules or (2) proper Texas program-based eligibility rules," said the FCC .
TracFone has already returned $ 1.2 million to USAC for Lifeline money received in Texas. The FCC said in its earlier replies to the investigation that "TracFone does not deny that it has made these claims for support." "Instead, TracFone claims it did not knowingly request reimbursement for customers beyond those authorized by Texas."
The FCC declined to respond to the lawsuit, "because TracFone has intentionally submitted the claims while confirming that all of these claims are for eligible subscribers – and it knew or should have known that claims were submitted for more subscribers than the month-end determination list . " This LIDA transmitted to TracFone would violate federal law. "The FCC has a new program to review Lifeline fraud prevention claims, but it was not yet operational in Texas or Florida when the alleged violations occurred.
FCC Democratic commissioners supported the action against TracFone, but asked the FCC to expand Lifeline's ability to help low-income Americans, especially during the pandemic. Pai was criticized for plans to limit Lifeline support and lost a lawsuit that focused on one of these plans.
"We have to abandon the FCC's cruel political proposals to cut and limit Lifeline and instead see how we can modernize the program and expand its reach," said FCC Commissioner Jessica Rosenworcel.