The FCC loves to pay itself on the back for the work it does to eliminate fraud, waste and abuse in the Lifeline free government cell phone program. This generally consists of finding little old ladies with two government-subsidized cell phones or tracking down a household with multiple Lifeline accounts.
That’s all small potatoes compared to the billions of dollars worth of fraud they just uncovered at Sprint.
FierceWireless.com has the details:
The FCC on Wednesday announced that T-Mobile will pay a $200 million penalty to the U.S. Treasury to settle an investigation into Sprint’s misuse of the federal Lifeline program for collecting federal subsidies for inactive users. According to the FCC, the penalty is the largest ever fixed-amount settlement it has secured to resolve an investigation.
Sprint’s Lifeline issues at hand and the resulting investigation began last year as the company was still working to win merger approval with T-Mobile, and was first flagged by the Oregon Public Utility Commission.
The carrier had been claiming monthly subsidies under the Lifeline program for 885,000 subscribers, even though they were inactive and not using the service, violating the commission’s “non-usage” rule, an investigation by the FCC’s Enforcement Bureau found.
Our readers regularly leave comments in which they complain that they cannot get their service providers to cancel their service. Sometimes they want to switch companies, other times they no longer qualify for the Lifeline program, and sometimes they just plain don’t want to participate int the program for one reason or another. We usually tell them that there are a number of ways to end your service. (1) Contact your service provider’s customer service team to cancel your account. (2) Don’t use the Lifeline cell phone for 30 days at which point service should be automatically cancelled. And (3) Don’t re-certify that you are eligible when the anniversary of your enrollment comes around. Any of these actions (or lack of action) should automatically cancel a Lifeline account.
The government pays each Lifeline service provider $9.25 per month for each active customer. It’s a perverse system that encourages cheating and incentivized service providers to keep customers enrolled even when they no longer want nor need the service.
How bad was the fraud? FierceWireless.com calculated the damage:
Sprint delivers wireless Lifeline service to millions of households under the brand Assurance Wireless. At the start of the investigation, the FCC said the 885,000 inactive Lifeline subscribers Sprint was getting paid for represented 30% of the carrier’s total Lifeline base and a full 10% of the entire Lifeline program’s subscribers.
As part of the announcement today, the FCC said Sprint agreed to enter into a compliance plan to make sure it follows the commission’s Lifeline rules in the future.
… From the start Sprint said it was committed to reimbursing federal and state governments for any subsidy payments that were collected as part of the error.
And while the $200 million is a record penalty, according to the FCC, it’s a far cry from investment analysts’ estimates at New Street Research last fall that said in addition to reimbursements, Sprint could face fines totaling in “the low billions of dollars.”
Scam the government out of billions, pay a penalty of millions.
Is this a great country or what?
h/t: FierceWireless
lynn chaken says
I began Lifetime free phone service almost a year ago, received a free phone that never ever worked and was defective. I recently read this was not uncommon, and that many Assurance smart phones were pre-set with malware, suspected as originating from China. All reviews for all companies providing free service for eligible Lifeline participants have terrible reviews, rating 1 or 2 stars, if that. They are all subsidized by the government and cheating them and us as well as what they provide is not useable in the main. Thankfully Sprint, a billion dollar company, owning Assurance Wireless. is the first to be held accountable.
We all need to make our voices heard…contact your senators and congressmen and advocacy groups!
Chuck says
So sprint gets fined millions. Is this the actual amount they received from fraud? Or who gets the excess of the fine? Just like when you go to court and get fined, and restitution (if court orders so), where does the money (once paid) go? Right into the justice systems pocket. Hope this explains why the legal system is very eager to bring you in for any reason, and why lawyers are recommended when they read you your miranda rights. If the courts dont bankrupt you, the lawyers will soak up the rest. In my experience, the victim is the financial loser, this being the end users who never received services that were probably needed as a LIFELINE! Wonder how many death certificates were created due to this fraud. This should have been a class action suit, with all concerned parties notified that their personal information was being used fraudulantly and should be compensated accordingly. But that would cut into the spoils, and besides we the people who initially funded the government via taxes dont deserve any of it. So where does the money go if the government does receive restitution?
Henry says
My guess is that the fine monies are deposited to the general US Treasury fund. The US budget deficit is over 2 trillion dollars. The penalty funds will make a tiny dent to the budget deficit.
BRENDA R says
USA corporations pay penalties for scamming the government, (maybe) but a citizen will typically go to jail, after they are stripped of every last dollar. How will any of us know if Sprint actually pays this penalty? We won’t.
Henry says
The list of FCC fines over the past ten years have seen several providers making money through fake enrollments, ineligible enrollments, duplicate enrollments, etc., on the Lifeline program. This is what I came across reading the FCC lawsuit information.
Cintex Wireless – 9.4 million
Life Wireless – 22.4 million
StandUp Wireless – 11.7 million
Sprint/T-Mobile./Virgin Mobile – 200 million
Total Call – 51 million
Safelink – 6 million
American Broadband – 63 million
This might be the “tip of the iceberg”.
Free Government Cell Phones says
That’s a pretty deep “tip,” Henry.
Chad A. Austin says
They scammed me and the lifeline. I have had no phone. They sent a defective one and refuse to replace it without charging money. What do I do? I’m not paying for a new phone. They also treated me like some bum. I’m just struggling through the covid-19 issues. Clearly scamming for who knows how much. Sending phones valued at about 10 cents that will never work. How many people have they done this too. They misinform me with every email. I have it saved.
Free Government Cell Phones says
Have you spoken directly with customer service or dealt with them through email. If you’ve spoken to an agent and not gotten any help, call in again and ask to speak to a supervisor.
De says
Why is my spring boost now selling me to a 3rd party ? They sell the signal. Is this legal??
Free Government Cell Phones says
Companies seem to swap customers and service regions all the time.