Nine months after the FCC held Total Call Mobile (TCM) potentially liable for $51 million in fines for alleged abuses of the Universal Service Fund (USF) Lifeline program that include the enrollment of “tens of thousands of duplicate and ineligible consumers,” TCM signed a consent decree with the FCC yesterday in which it admitted to engaging in fraudulent billing and other program abuses. In addition to paying a fine of $30 million as prescribed by the consent decree, TCM— in the words of an FCC news release—will also “permanently lose its authorizations to participate in the Lifeline program anywhere in the country.”
The Lifeline program was instituted by the FCC in 1985 to provide eligible low income households with a monthly subsidy to offset the cost of wireline (and later, wireless) telephone services. Earlier this year, the FCC adopted a Report and Order extending Lifeline support for the first time to fixed and mobile broadband services. As part of that order, and with the goal of curtailing program fraud and abuse, the FCC also enacted 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.
As stated by the FCC in a Notice of Apparent Liability for Forfeiture (NALF) issued last April, TCM—a provider of Lifeline services in 19 states—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.” The NALF also claimed that 800 TCM sales agents in 13 states 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.”
While admitting to these practices, TCM informed the FCC that it also failed to (1) take corrective action or “put in place systems to prevent fraudulent conduct,” (2) implement “effective policies and procedures and ensure eligibility of Lifeline subscribers,” and (3) properly train its sales agents. Described by the FCC as “unprecedented,” the $30 million fine mandated by the consent decree encompasses a repayment of Lifeline program funds as well as monetary penalties payable to the U.S. Treasury. Proclaiming that the FCC has “no toleration for fraud,” FCC Enforcement Bureau Chief Travis LeBlanc announced that the consent decree “affirms our commitment to pursue the strongest sanctions for those who defraud or abuse the USF program.”