Verizon Will Pay $23.5 Million For TracFone FCC Low-Income Funding Program Violations





group looking at phones

The Federal Communications Commission’s Enforcement Bureau reached a settlement with TracFone Wireless, resolving an investigation into whether the Verizon subsidiary violated rules for its Lifeline and Emergency Broadband Benefit programs.

After being acquired by Verizon in 2021, TracFone self-identified certain occurrences where the company was found to have violated Lifeline and EBB rules. After reporting to the FCC and the Universal Service Administrative Company, TracFone agreed to pay a $17.49 million civil penalty and a $6.01 million fine to resolve a 2020 Notice of Apparent Liability for additional Lifeline violations.

The settlement marks another win for the FCC as it continues to enforce strict policies and protections to safeguard consumers against fraud. In 2019, Assurance Wireless, a Sprint brand, was found to have one million, or one in eight Lifeline subscribers, who weren’t using the services, according to Law Econ Center

“Whether attributable to fraud or lax internal controls, or both, we will vigorously pursue allegations of misconduct that harms critical FFC programs designed to help those most in need of communications-related services,” said Enforcement Bureau Chief Loyaan A. Egal. “This settlement sends a strong message that we are determined to protect the integrity of these programs.” 

The Lifeline program gives low-income customers a discount of up to $9.25 on broadband and phone services. Participating carriers receive funds for each eligible customer through the Universal Service Fund and apply it to the customer’s account as a discount. The EBB program helped lower the cost of high-speed internet and devices in 2021 during the COVID-19 pandemic.

TracFone said 79 field enrollment representatives enrolled subscribers in Lifeline and EBB services using falsified tax documents. The group was paid a commission for enrolling customers, which is against the FCC’s rules. The company returned $22.65 million to the Universal Service Fund for Lifeline from January 2019 through October 2021. It also had to reimburse the EBB $17.88 million.

TracFone has also agreed to pay $6.01 million to settle another Notice of Apparent Liability investigation alleging the company claimed Lifeline funding for thousands of Texas customers who weren’t eligible, as well as Florida enrollments from sales agents manipulating customer data to create fake accounts.

Today, TracFone entered into a Consent Decree with the Enforcement Bureau setting a series of terms and conditions to comply with the programs’ rules in the future. The settlement takes into account the company’s voluntary disclosures of violations.

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