FCC’s Lifeline accused of massive fraud
$1.2 million annually went to fictitious or deceased recipients
A new GAO report found massive fraud within the Federal Communications Commission’s Lifeline program, which subsidizes cellular and broadband service for low-income Americans.
The agency’s three-year audit of the Lifeline program, begun in June 2014 to May 2017, found that more than one-third (36%) of Lifeline customers could not be confirmed as actually eligible for the program. The GAO also found that $1.2 million annually went to fictitious identities or recipients who were dead.
In undercover tests, the GAO found that phone companies approved Lifeline applicants with false personal information nearly two-thirds of the time (63%).
“A complete lack of oversight is causing this program to fail the American taxpayer — everything that could go wrong is going wrong,” said Sen. Claire McCaskill, D-Mo., in a statement released with the report Thursday. “We’re currently letting phone companies cash a government check every month with little more than the honor system to hold them accountable, and that simply can’t continue.”
Two years ago, in a separate report, the GAO recommended the FCC evaluate the Lifeline program. Last year, the FCC did approve a plan for a third-party evaluation by December 2020.
As part of that Lifeline modernization measure, the FCC also approved Lifeline funds be used for mobile and fixed broadband service. When it was created three decades ago, Lifeline provided assistance for low-income homes to get landline telephone service.
According to the GAO’s new report, Lifeline households numbered 12.3 million during the fourth quarter of 2016, with disbursements of about $1.5 billion.
FCC Chairman Ajit Pai, a Republican, said the GAO’s findings confirm weaknesses he voiced concerns about last year during discussion about modernizing Lifeline. “Commission staff and the Office of Inspector General have already been developing recommendations to better safeguard taxpayer funds,” he said in a statement. “I stand ready to work with my colleagues to crack down on the unscrupulous providers that abuse the program so that the dollars we spend support affordable, high-speed broadband Internet access for our nation’s poorest families.”
Earlier this year, Pai blocked the approval of nine companies from joining Lifeline. The FCC under previous chairman Tom Wheeler had created a national verifier for providers joining the program.
Pai voted against the overall measure — it passed 3-2 on party lines — and in his dissent, he noted that states had done the best job at combating fraud in the system.
During the three-year audit, the FCC and the Universal Ser- vice Administrative Co., the notfor-profit organization that administers Lifeline, “have taken some steps to enhance controls over finances and subscriber enrollment,” the GAO says.
The FCC has also begun the process to move the $9 billion in Lifeline funds — consumers contribute to this via the Universal Service Fund fees on their phone bills — to the Treasury.
Currently, the Lifeline funds are kept in a private bank account, and the FCC has no control over the funds.
“Since 2005, GAO has recommended that the FCC move these federal funds to the U.S. Treasury, but so far no change has been made,” noted McCaskill, who is the top-ranking Democrat on the Senate Homeland Security and Governmental Affairs Committee.
No one is arguing that the program be scrapped, and such a move “would be catastrophic for those most in need,” said FCC Commissioner Mignon Clyburn, a Democrat, in a statement. “The answer is not denying access to those who cannot afford connectivity and access to critical services like 911, the next steps should include rolling up our sleeves and addressing any imperfections that remain.”