In total, the potentially fraudulent activity may have resulted in about $1.4 million in misspending, according to federal investigators. The government sends that money directly to telecom carriers, which under law accept federal benefits on their subscribers’ behalf and apply the discounts to customers’ bills. None of the companies that processed the suspect applications and received federal funds are named in the report.
But the FCC’s inspector general on Thursday described the matter as a serious threat, one that if left unresolved could undermine the roughly $14 billion in subsidies Congress adopted last year. And its findings offered a stark reminder of the myriad problems that plagued its decades-old predecessor — an initiative to provide low-cost telephone service that had been riddled with fraud over the years.
The FCC did not immediately respond to a request for comment.
David L. Hunt, the agency’s inspector general, said in a statement that telecom providers seeking “program support each month after failing to properly train and monitor their sales agents’ enrollment activity will be held accountable.”
Lawmakers approved the Affordable Connectivity Program on a bipartisan vote last November as part of a sprawling $1.2 trillion law to improve the nation’s infrastructure. The benefit system augmented a broadband initiative enacted earlier in the coronavirus pandemic, as Congress sought to ensure hard-hit, cash-strapped Americans could maintain their internet connections at a time when life, work and school had migrated online.
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Known as ACP, the program’s guidelines are generous. Families can qualify if they already receive other government support, including low-cost health insurance under Medicaid and low-income education awards known as Pell Grants, or if their income does not exceed 200 percent of the federal poverty line. The up-to-$30 monthly benefit can go towards a wide array of plans nationally, and the subsidy itself is larger — up to $75 — for those who live on tribal lands.
Lacking a Lifeline: How a federal effort to help low-income Americans pay their phone bills failed amid the pandemic
Since its adoption, more than 13 million subscribers have enrolled, representing roughly one-quarter of the total number of Americans who are estimated to be eligible. The gap reflects the challenges the government faces in reaching communities that are not connected — and navigating them through what can be a complicated application process. Hoping to boost enrollment, Vice President Harris in recent months has embarked on a nationwide effort to promote the program.
In doing so, though, the government has faced a challenge: encouraging participation while warding off criminals who may be inclined to steal the aid from Washington. The potential scams uncovered by the inspector general for the FCC, revealed in a report Thursday, put that task in sharp relief.
The alleged fraud hinges on a critical stipulation in the program: An entire household is eligible for monthly broadband subsidies even if only one person, including a child or dependent, meets the criteria for participation. A family could receive a monthly $30 credit, for example, if they have a student who receives free and reduced lunch — even if their parents do not obtain other federal support.
To receive aid this way, applicants for broadband bill credits are asked to provide the name of the child or other dependent through which they qualify. But telecom carriers and the US government apparently did not catch repeated instances in which households used the same child or other dependent’s name and address — and in some cases, even their same partial Social Security number — and received monthly support anyway.
In Oklahoma, 1,042 households obtained their broadband aid by saying they had a 4-year-old child — the same 4-year-old — who was receiving Medicaid benefits. The child’s name, date of birth and last four digits of their Social Security number “were used over and over again,” according to the FCC, which said the transactions began in December.
Nationally, the FCC’s top watchdog discovered 11 other instances in which seemingly eligible applicants had been used to obtain benefits hundreds of times each. In Texas, for example, one unnamed telecom company enrolled 997 households in the government internet program, even though each of the applicants included the same 18-year-old.
In its alert, issued Thursday, the inspector general acknowledged the total amount of improper payments “remains low” — but stressed that the data show “use of this flagrant technique is steady to increasing, particularly for certain providers.”
The findings marked the latest warning from the FCC’s top overseer, which this year has highlighted potentially predatory practices on the part of telecom carriers and specific instances of stolen or abused funds. Some of the alerts and enforcement efforts involved an earlier iteration of the internet subsidies, called the Emergency Broadband Benefit, which Congress adopted as part of the American Rescue Plan in 2021.
But fraud targeting government telecom programs long predates the pandemic and the more recent efforts to ensure Americans can afford internet access. For decades, a wide array of threats sapped money from the decades-old program known as Lifeline, which provides low-cost telephone service to Americans in need. The FCC issued a slew of massive penalties — including a $200 million fine against Sprint in 2020 — for abuses that allowed ineligible subscribers to obtain government benefits. In its wake, the FCC, largely under Republicans, tightened it to a point that critics felt it discouraged enrollment.