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FCC Proposes $6 Million Fine Against TracFone

The FCC has proposed a $6 million fine against prepaid service provider TracFone Wireless. 

The FCC's Enforcement Bureau said the company apparently claimed Lifeline subsidies for customers who were not eligible to receive them. At issue are thousands of subs in Texas and hundreds of subs in Florida. 

Related: FCC Won't Drop Suspect Lifeline Subs 

The FCC said that was because sales agents in Florida, working on commission, manipulated eligibility information of existing subs to enroll fictitious accounts. In Texas, the company allegedly claimed more Lifeline support than the Texas Public Utility Commission authorized. The PUC is the one who makes eligibility calls in the state. 

The fine is based on a total of 5,738 apparently improper claims from a single month--June 2018--plus a bump up for the "egregious conduct" of the Florida agents.  

The Lifeline program is a monthly Universal Service Fund (USF) subsidy of up to $9.25 on broadband and phone service for low-income consumers. Participating carriers get money for each eligible sub, which they must pass through in the form of a discount. The USF fund comes from fees on consumer's phone bills. 

“Every dollar misdirected from the Lifeline program to a carrier that violates our rules is a dollar that won’t go toward providing more affordable connectivity to low-income Americans,” said FCC Chairman Ajit Pai in a statement. “Ensuring that this program works for those who need it most is especially important now, during the ongoing coronavirus (COVID-19) pandemic." 

The FCC has already taken steps to boost the Lifeline program, including temporarily waiving some rules aimed at safeguards against waste, fraud and abuse. But Pai signaled with the proposed fine that the FCC was still rooting out such waste, fraud and abuse when it found it," adding "I’m hopeful that our new rule prohibiting carriers from paying commissions to employees or sales agents based on the number of Lifeline customers they sign up will help deter the kind of apparent fraud we’ve seen in this case.”