Verizon to Settle $23.5 Million for TracFone’s Violations in FCC Low-Income Funding Programs

Verizon’s subsidiary, TracFone Wireless, is set to pay a substantial $23.5 million as part of a settlement with the Federal Communications Commission (FCC) over violations related to its Lifeline and Emergency Broadband Benefit (EBB) programs.

The settlement follows an investigation into whether TracFone, now unde Verizon’s ownership since 2021, breached rules governing these crucial programs.

Verizon to Settle $23.5 Million for TracFone's Violations in FCC Low-Income Funding Programs

TracFone voluntarily identified instances where it ran afoul of the rules for both Lifeline and EBB.

The Lifeline program offers a discount of up to $9.25 on broadband and phone services for low-income customers.

Carriers participating in the program receive funds from the Universal Service Fund, applying it as a discount to eligible customers’ accounts.

The EBB program, on the other hand, aimed to reduce the cost of high-speed internet and devices during the COVID-19 pandemic in 2021.

The violations stem from TracFone’s admission that 79 of its field enrollment representatives engaged in improper practices, enrolling subscribers in Lifeline and EBB services using falsified tax documents.

These representatives received commissions for enrolling customers, a clear violation of FCC rules.

As a consequence, TracFone agreed to pay a $17.49 million civil penalty and an additional $6.01 million fine to address a 2020 Notice of Apparent Liability for further Lifeline violations.

Verizon to Settle $23.5 Million for TracFone's Violations in FCC Low-Income Funding Programs

This settlement stands as a significant victory for the FCC, emphasizing its commitment to enforcing stringent policies and protections to safeguard consumers from fraudulent activities.

The FCC’s Enforcement Bureau Chief, Loyaan A. Egal, stated,

“Whether attributable to fraud or lax internal controls, or both, we will vigorously pursue allegations of misconduct that harms critical FCC programs designed to help those most in need of communications-related services.”

This isn’t the first instance of a carrier facing consequences for violations related to Lifeline.

In 2019, Assurance Wireless, a Sprint brand, was found to have one million Lifeline subscribers, about one in eight, who weren’t utilizing the services, highlighting the need for vigilant oversight.

TracFone’s misconduct didn’t stop at falsifying tax documents.

The company also admitted to claiming Lifeline funding for thousands of Texas customers who were ineligible.

In addition, there were Florida enrollments where sales agents manipulated customer data to create fake accounts.

To rectify these issues, TracFone has returned a substantial $22.65 million to the Universal Service Fund for Lifeline from January 2019 through October 2021.

Additionally, the company reimbursed the EBB program $17.88 million.

To ensure compliance in the future, TracFone entered into a Consent Decree with the FCC’s Enforcement Bureau, agreeing to a set of terms and conditions.

The settlement takes into account the company’s voluntary disclosures of violations, showcasing a commitment to rectifying the issues at hand.

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