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Tracfone Is Staring At A $6 Million Fine From The FCC For Lifeline Violations

FCC Proposes Tracfone Wireless Be Fined $6M For Lifeline Fraud
FCC Proposes Tracfone Wireless Be Fined $6M For Lifeline Fraud
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The FCC recently filed a 19-page complaint against Tracfone Wireless, INC.  The complaint states that Tracfone sought Lifeline reimbursement from the government for ineligible subscribers and fabricated subscriber data.  The FCC has proposed to fine Tracfone $6 million for the violations.

According to the complaint, the case against Tracfone is described as being "simple."  The FCC found that in 2018, agents of Tracfone Wireless, INC, doing business as (DBA) SafeLink Wireless fabricated subscriber data in Florida and sought reimbursement for ineligible subscribers in Texas.

Safelink Wireless is one of several Tracfone owned brands that also include Straight Talk Wireless, Total Wireless and Walmart Family Mobile among others.

Tracfone's alleged Lifeline fraud resulted in Tracfone receiving $1.2 million in reimbursements from the government for the fraudulent customer counts.  The money has since been returned to the government.  The government's Lifeline program is designed to allow low-income consumers access to wireline, wireless and broadband internet services.  Lifeline offers up to a $9.25/month discount on those services to eligible subscribers.  The discounts are paid out through government subsidies to the businesses that offer the services.  If a business is making up its subscriber counts it can simply keep that $9.25/month to itself.

In order for a consumer to receive Lifeline assistance, they must either have an income at or below 135% of the Federal Poverty Guidelines, or participate in certain federal assistance programs such as Medicaid.

Tracfone's SafeLink Wireless currently offers Lifeline services to just over 2.4 million subscribers.  At the time the fraudulent incidents took place, the brand had over 2.8 million subscribers in 42 states.

How Tracfone Committed Lifeline Fraud

According to the FCC's document, Tracfone did admit that its sales agents improperly enrolled subscribers in Florida into the Lifeline program.  Fictitious accounts were created by manipulating the eligibility information of existing Tracfone subscribers.  Tracfone discovered that its agents in Florida had found a way to misuse Lifeline enrollee's dependents' information to populate other enrollment applications.  The agents apparently used the dependents’ identifying information to enroll multiple members of the same household to generate additional sales.  The Lifeline sales agents earned a commission on those sales from TracFone while TracFone benefited by receiving government subsidies for the fraudulent subscribers.

In Texas, during 2018 Tracfone claimed more Lifeline subscribers than it had been approved for.  The net result was Tracfone appeared to have overclaimed $229,483 worth of federal Lifeline support.

The agency states that Tracfone "apparently willfully and repeatedly" violated policy regarding Lifeline support.  Tracfone asked the agency to withhold most of its findings from the public claiming it contained "highly confidential commercial, financial and personal information."  The commission disagreed with the exception of a few items and felt it was in the public's best interest to reveal a majority of the information.

Unfortunately, this isn't the first time a company either advertently or inadvertently took advantage of the government's program.  Sprint was recently accused of overcounting its Lifeline subscribers for years while collecting tens of millions of dollars in federal subsidies.

Update 4/10/2020: A Tracfone spokesperson reached out to BestMVNO to issue the following statement:

"TracFone is reviewing the Notice of Apparent Liability (“NAL”) and will respond at the appropriate time. As the leading provider of Lifeline services, we take seriously our stewardship of public dollars and will continue to focus on connecting millions of low-income customers to school, jobs, healthcare, and essential social services. We look forward to working with the FCC and Congress to promote this essential program during these difficult times."

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