Lawmakers Tell Pai to Act Against Lifeline Scammers Now

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Sens Ron Johnson (R-WI) and Claire McCaskill (D-MO).Photos by Leslie Stimson, Inside Towers

In a hearing that turned contentious at times, members of the Senate Homeland Security and Governmental Affairs Committee on Thursday examined waste and mismanagement in the FCC’s Lifeline program, which helps subsidize broadband and phone services for low-income users. Chairman Sen. Ron Johnson, (R-WI) said given the problems the Government Accountability Office found in its investigation, hard questions need to be asked. “Should we end the program? Maybe we should start thinking about banking the money.”

That’s because out of a sample of 3.4 million Lifeline subscribers, GAO was unable to verify whether 1.2 million subscribers were enrolled in the public-assistance program they claimed on their Lifeline application to qualify for the program. GAO also identified 6,378 beneficiaries that appeared on the Social Security Administration’s Death Master File and 5,510 potential duplicates. “Based on these findings, we are likely allocating approximately $140 million annually to fraudulent subscribers,” said Johnson.

GAO Director of Audit Services Seto Bagdoyan told lawmakers, the FCC and the Universal Service Administrative Company, which implements the program for the Commission, have taken some steps to regain financial control. The FCC has a “preliminary plan” to move the Lifeline funds out of a private bank account and into the U.S. Treasury, “which will have better tools to manage the funds.”

FCC Chairman Ajit Pai conducted his own investigation into the program when he was still a Commissioner and found instances of several subscribers using the same address, including one that had over 10,000 subscribers. Johnson found that “jaw dropping.” He asked how the program verifies that applicants actually get a phone.

“We really don’t know if they get a phone,” replied Bagdoyan. “And we don’t know how many have other phones and from whom.”

The FCC and the USAC plan to launch a national verifier this year in six states to clean up the Lifeline list by removing fraudulent, dead and /or “phantom” names. Some 20 states will be added to the verifier in 2018 and all states will be included by the end of 2019. USAC Acting CEO and General Counsel Vicki Robinson assured lawmakers the verifier will be completed on time and on budget.

Sen. Gary Peters (D-MI) said, “It angers me you’ve got bad actors scamming the program.” The scam seems to come from the phone providers, he said, who get incentives “to sign everybody up.”

Asked if the verifier will eliminate waste, fraud and abuse, Robinson and Pai said yes. Under his watch, the Enforcement Bureau has made going after the scammers a priority, Pai assured the committee. But Ranking Member Sen. Claire McCaskill (D-MO) said “You’re not. Nobody’s gone to jail.” She held a list showing some $90 million is owed from a total of 10 carriers. “You wrote checks for $2.4 billion over the last two years. How is that happening?”

Pai said enforcement cases are in the works that he can’t give public details about and reiterated the issue “is not falling through the cracks,” under his leadership.

McCaskill and Johnson urged Pai to prosecute the companies that owe the program money and hire forensic auditors to check the books of the top 30 Lifeline carriers. “I’d get in there and do it now,” said Johnson. “Go in there assuming you will find a lot of waste and fraud.”

By Leslie Stimson, Inside Towers Washington Bureau Chief

September 15, 2017              

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