Verizon Subsidiary TracFone Wireless Faces $23.5 mn Penalty Over Lifeline and EBB Violations

The Federal Communications Commission (FCC) has concluded a settlement with TracFone Wireless, a Verizon subsidiary, following an investigation into potential violations of rules governing the Lifeline and Emergency Broadband Benefit (EBB) programs. The agreement includes a $17.5 million civil penalty and additional compensation to resolve prior violations.
Verizon retail storeTracFone Wireless, subsequent to its $6.25 billion deal by Verizon, voluntarily reported instances to the Commission and the Universal Service Administrative Company where potential breaches of Lifeline and EBB rules were identified. This led to an intensive investigation, uncovering discrepancies in TracFone’s handling of customer usage records, a vital aspect in preventing the misuse of public funds.

The investigation revealed lapses in TracFone’s procedures for determining customer usage, resulting in claims for Lifeline benefits for users who hadn’t utilized the service in the preceding 30 days, contrary to FCC regulations. Notably, internal systems mistakenly categorized inbound text messages as qualifying Lifeline usage and claimed support for customers enrolled in both Lifeline and EBB programs, despite not using one of the services within the stipulated timeframe.

Additionally, TracFone disclosed instances where field enrollment representatives utilized falsified tax documents to enroll subscribers in Lifeline and EBB services. Following collaboration with auditors, TracFone reimbursed a total of $40.5 million to the Universal Service Fund for Lifeline and EBB funds, acknowledging errors in payment claims.

TracFone further admitted to compensating 79 field enrollment agents based on customer enrollments, a practice in direct violation of FCC regulations prohibiting such arrangements.

To address these issues, TracFone entered into a Consent Decree with the FCC, accepting stringent compliance terms considering its voluntary disclosures and cooperation during the investigation. Moreover, the settlement includes a $6.013 million resolution for prior violations in Texas and Florida, where Lifeline funding was claimed for ineligible customers and sales agents manipulated data to create false accounts.

The Lifeline program, designed to assist low-income consumers with monthly discounts on broadband and phone services, relies on Universal Service Fund dollars sourced from fees on American consumers’ phone bills. The EBB program, separately funded, aimed to reduce high-speed internet costs for eligible households during the COVID-19 pandemic in 2021.

FCC’s Enforcement Bureau emphasized its commitment to safeguarding the integrity of crucial assistance programs and ensuring compliance among service providers. Chief Loyaan A. Egal stressed the agency’s resolve in pursuing allegations of misconduct that undermine programs aimed at aiding those most in need of communication-related services.