FCC Plans $51 Million Fine against Total Call for Lifeline Program Abuse
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FCC Plans $51 Million Fine against Total Call for Lifeline Program Abuse

April 11, 2016

The Federal Communications Commission (FCC) has announced that it plans to fine Total Call Mobile $51 million for apparently enrolling tens of thousands of duplicate and ineligible consumers into the Lifeline program.

The FCC's Lifeline program provides discounted phone service to low-income consumers so that they have access to the communications tools necessary to connect with jobs, family, and emergency services.

The FCC alleges that since 2014, Total Call has requested and received an estimated $9.7 million dollars in improper payments from the Universal Service Fund for 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.

Lifeline providers are required to ensure that their employees do not commit fraud within the program. This is the largest fine that the FCC has proposed against a Lifeline provider.

"We reserve the strongest sanctions for those who defraud or abuse federal programs," said FCC Enforcement Bureau Chief Travis LeBlanc. "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."

The Enforcement Bureau's Universal Service Fund Strike Force conducted the investigation of Total Call, which provides Lifeline services in at least 19 states and territories. The Strike Force's investigation found that Total Call apparently engaged in systematic and egregious misconduct.

In addition to the proposed $51 million fine and in light of the egregiousness of the conduct alleged, the FCC has indicated that it may also initiate proceedings to revoke Total Call's authorizations to operate as a Lifeline provider and a common carrier.

Under the current Lifeline program rules, eligible telecommunications carriers receive $9.25 per month for each qualifying low-income consumer receiving phone service, and are required to pass a discount equal to the reimbursement along to the consumer. Lifeline providers may seek reimbursement for providing service to a consumer only after confirming the consumer's eligibility and that the consumer is not already receiving Lifeline service.

Last week, the FCC adopted the 2016 Lifeline Reform rules, modernizing the Lifeline program. Among other reforms, the rules establish an independent National Eligibility Verifier to determine the eligibility of consumers enrolling in Lifeline in order to stop abuses of the type alleged in today's proposed fine. This new national verifier puts an independent party in control of determining subscriber eligibility thereby removing that obligation from self-interested providers.

A copy of the FCC's Notice of Apparent Liability against Total Call Mobile is available here.

Find out more about the Lifeline Program.