Oklahoma is “ground zero for government cellphone fraud,” charges a TV news team that investigated a federal program offering free cellphones and near-free mobile service to low-income residents.
The Oklahoma Impact Team — of “News On 6” in Tulsa and “News 9” in Oklahoma City — claims the Lifeline program is being abused by consumers who don’t qualify for help.
Lifeline is a Federal Communications Commission (FCC) program established in 1985 to ensure low-income Americans have a phone to connect with jobs, family and emergency services. The program, which initially covered landlines, was expanded to include cellphones in 2003.
Lifeline members pay as little as 99 cents a month for a mobile subscription. The government makes up the difference to participating service providers. Consumers finance most of the program through a universal service charge on their phone bills, which ranges from $2.50 to $2.75 a month per household.
In 2011, the Lifeline program spent $1.75 billion, most of it subsidizing cellphone service.
According to the FCC, the program has been a success, with phone use among low-income households increasing from 80 percent in 1985 to 95 percent in 2011.
Allegations of fraud have dogged the program, however; a TV news team found similar irregularities in Minnesota earlier this year, as GIMBY’s The Backyard Fence reported. The FCC has overhauled Lifeline to address those complaints, discovering and canceling 700,000 duplicate accounts just last year. It recently drafted stricter screening rules for participating companies, to ensure that only people who qualify receive the benefits of the program.
But as investigators from the Oklahoma Impact Team found, cell company employees tasked with meeting phone-giveaway quotas are bending, breaking and ignoring the rules — many of them handing out phones without requesting more than the flash of an I.D. card.
One journalist allegedly got a phone without meeting even that minimal qualification. The phone distributor “identified himself as an employee of Easy Wireless,” Jennifer Loren reported on News 9. “He gave me a flip phone, a charger and a post card with a toll-free customer service number for Easy Wireless.”
There’s a simple reason why Oklahoma is an attractive place for government-subsidized cellphone fraud: in most states, companies that provide Lifeline phones earn an average of $10 per month per phone – but customers who live on federally-recognized tribal lands get enhanced benefits, so providers can earn as much as $35 per month per phone there. In Oklahoma, the FCC’s “Tribal Lands” provision even applies to “former reservation” land, meaning the subsidy covers nearly the entire state.
TV news investigators aren’t the only Oklahomans disgruntled about Lifeline. The program has long been a target of Senator Tom Coburn, whose annual Wastebook report details allegedly reckless and wasteful federal spending.
“With providers incentivized to maximize the number of phones they hand out, significant fraud and abuse have plagued the program in recent years,” says this year’s Wastebook entry about Lifeline.