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FCC looks to fine TracFone and others $14 million for cheating Lifeline program

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Tracfone stock flickr Doug Grinbergs
Tracfone stock flickr Doug Grinbergs

The FCC is proposing fines of more than $14.4 million for five companies accused of defrauding the federal Lifeline phone subsidy program. The benefit program helps cover the cost of monthly telephone service for low-income consumers. Federal guidelines permit one subsidized wireless subscription per person, but TracFone Wireless, Icon Telecom, Assist Wireless, Easy Wireless and UTPhone allegedly cheated the system by giving multiple subsidies to "thousands" of individual customers. In a statement (issued just hours before the US government shutdown), acting FCC chairwoman Mignon Clyburn says the practice is illegal, and that the underhanded tactics "divert resources from legitimate users of the program." "It must stop," Clyburn added.

Last year the FCC introduced cost-saving measures aimed at cutting back on rampant waste and abuse of the 25-year-old program. Clyburn reiterated those goals in the announcement. "Ultimately, our objective is to eliminate fraud, waste and abuse, while preserving and promoting the availability of communications services to those in need," she said. Some members of Congress insist stronger oversight is necessary, with others arguing that cutting mobile phone service from the program could put a quick end the ballooning costs.