On the heels of its decision last week to enact reforms to the Universal Service Fund (USF) Lifeline program, the FCC announced plans to hold Total Call Mobile (TCM) liable for $51 million in fines for alleged Lifeline program abuses that include the enrollment of “tens of thousands of duplicate and ineligible consumers into the Lifeline program.” Lifeline was instituted by the FCC in 1985 to provide eligible low income households with a monthly subsidy to offset the cost of fixed (and later, wireless) telephone services. The FCC adopted rules last week to extend Lifeline support for the first time to fixed and mobile broadband services. To combat fraud and abuse, the FCC also enacted various program reforms that include the establishment of a third-party “national verifier” that would confirm consumer eligibility for Lifeline assistance and thus remove that function from the hands of carriers.
According to the FCC, TCM—a Lifeline service provider in 19 states—had requested and received at least $9.7 million in improper USF Lifeline payments since 2014 “despite repeated and explicit warnings from its own employees, in some cases compliance specialists, that company sales agents were engaged in widespread enrollment fraud.” Investigators with the FCC’s Universal Service Fund Strike Force also found that, during the fourth quarter of 2014 alone, “99.8 percent of [TCM’s] enrollments nationwide involved overriding the third-party verification system designed to catch duplicate enrollments.” More than 800 TCM sales agents in 13 states are alleged to have engaged in tactics that include “surreptitiously recording consumers’ identifying information, enrolling individual consumers for multiple phones without their knowledge, and falsely claiming that ineligible consumers met the requirements to participate.”
The proposed $51 million penalty would constitute the largest fine ever imposed by the FCC for abuses of the Lifeline program. TCM, which has the option to challenge the fine, offered no comment.