FCC Review Uncovers Abuse of Cell Phone Subsidies

By FOXBusiness

Review of Cell Phone Subsidies Turns Up Fraud

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Review of Cell Phone Subsidies Turns Up Fraud

Rep. Tim Griffin, (R-Ark.), on the government's subsidized cell phone program that provides free cell phones to low-income Americans.

The U.S. government program that subsidizes cell phones given to low-income Americans has been abused by millions of people who are ineligible for it, The Wall Street Journal

Last year the U.S. government spent $2.2 billion through the Lifeline program, which launched in 1984 to give phones to people unconnected to emergency services and their jobs. Lifeline is funded by landline and wireless customers who pay fees with each monthly bill. On average, Americans pay $2.50 a month toward subsidized communication programs such as Lifeline.

Lifeline is available to people who meet federal poverty guidelines or who are on food stamps, Medicaid or other assistance programs. The program has grown substantially since 2008, when payouts totaled $819 million. More wireless carriers have successfully persuaded regulators to let them offer the service, and millions of ineligible customers have received Lifeline support through carriers.

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The Federal Communications Commission last year reworked the phone program’s rules to require that carriers verify the eligibility of existing subscribers. Each household is still permitted only one Lifeline subscriber, and carriers must now check state or federal social-service databases to confirm eligibility. Phone companies were required by Jan. 31 to report the number of subscribers removed from Lifeline by the end of 2012.

While the FCC expected 15% of current Lifeline users would be dropped out of the program as a result, many more were deemed ineligible. Carriers discovered millions of ineligible Lifeline users on their rolls.

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