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Democratic Committee Investigation Finds Recent GOP Allegations of Lifeline Fraud Are Baseless

Jul 12, 2016
Press Release
Report Concludes Republican Claims of $500 Million in Fraud Rely on Unfounded Assumptions and Bad Data

Washington, DC – Energy and Commerce Ranking Member Frank Pallone, Jr. (D-NJ) released a report today concluding that recent Republican allegations of $500 million of waste, fraud, and abuse in the Federal Communications Commission’s (FCC’s) Lifeline program are based on faulty assumptions and bad data.   

The report, which is the result of a Democratic Committee staff investigation, found that the Republican claims relied solely on a faulty assumption that all Lifeline beneficiaries living in multi-household addresses — including veteran group homes, nursing homes, and homeless shelters — received their phones due to fraud.  The investigation has uncovered no evidence to support this assumption, and found that 43 percent of the multiple-household filings were submitted out of an abundance of caution for consumers whose information had already been verified. 

In June, House Republicans pointed to allegations of $500 million in waste, fraud, and abuse to justify a vote on a bill introduced by Rep. Austin Scott (R-GA) to dismantle over 80 percent of the Lifeline Program.

“This investigation confirms that the GOP’s over-the-top allegations of widespread fraud in the Lifeline Program are not based on facts,” Pallone said.  “Even worse, to arrive at these trumped up claims, Republicans assumed the worst of struggling American families in order to cut a successful program that provides access to basic and essential communications services.

“Lifeline remains a critical program for millions of Americans.  We should be working together to strengthen it and eliminate true waste where it exists, rather than simply ripping phones away from everyone who is benefiting from these services,” Pallone concluded.

The Democratic investigation found that:

  1. The evidence does not support claims of $500 million of abuse of a mechanism designed to help Lifeline customers living in multi-household addresses like homeless shelters.  The investigation found that a key assumption underlying this allegation—that nearly everyone who used this mechanism enrolled fraudulently—is wrong.

 

  1. Lack of adequate safeguards in the 2008 Lifeline expansion created an environment that led to increased waste, fraud, and abuse.

 

  1. Since 2010, the FCC and Universal Service Administrative Company (USAC) have reined in a billion dollars in waste, fraud, and abuse.  Nonetheless, more can be done.

 

  1. Lifeline continues to provide essential service to low-income Americans.

The Democratic Committee staff offered several recommendations to address the investigation’s findings:

  1. USAC Should Continue Targeted Audits and In-Depth Data Validations (IDVs).

 

  1. The FCC Should Periodically Review Lifeline Program Data for New Trends.

 

  1. The FCC and USAC Should Work to Ensure that the National Verifier Implementation Adequately Addresses Misuse of Eligibility Documentation as Seen in the Total Call Mobile Case.

 

  1. The FCC and USAC Should Review the Use of the Independent Economic Household (IEH) Worksheet and Trends Related to Its Use.  The IEH Worksheet is the primary mechanism used to provide phones to eligible Lifeline customers who live at multi-household addresses.

 

  1. The FCC Should Consider Possible Revisions to Program Safeguards.

 

  1. The FCC Office of General Counsel and the FCC Office of Inspector General Should Continue the Investigation into these Allegations

The Lifeline program has provided discounted and no-charge phone service for low-income Americans for over three decades.  To qualify for the program, Lifeline subscribers must either have an income that is at or below 135 percent of the federal poverty guidelines or they must participate in certain assistance programs.  Nearly 13 million low-income Americans used the program as of October 2015, which is about 33 percent of those who are eligible. 

The Democratic staff review has included requests for information from USAC; a review of relevant documents, communications, and briefings with numerous Lifeline experts, including officials from USAC; and non-confidential communications with officials from the FCC, and representatives from five companies that offer Lifeline services.

This report and supporting documentation will be provided to the FCC’s Office of General Counsel and Office of Inspector General for further review.