FCC Announces $13.4 Million Settlement with Major Lifeline Provider

The Federal Communications Commission announced that the FCC and Department of Justice (DOJ) have reached a $13.4 million settlement with TracFone Wireless in connection with violations of FCC Lifeline program rules. Specifically, the settlement resolves allegations that TracFone violated the False Claims Act by signing up more than 175,000 ineligible customers for the Lifeline program during 2012-2015 and that the false claims resulted from TracFone’s lax oversight and monitoring of its Lifeline program. A detailed investigation by the FCC Office of Inspector General revealed that TracFone did not have adequate internal controls and other Lifeline compliance measures in place over an extended period of time. As a result, TracFone failed to detect that for several years its contract sales agents in Florida were improperly targeting and marketing Lifeline services by exploiting a loophole in TracFone’s process for verifying Lifeline eligibility. The settlement resolves a qui tam action in the United States District Court for the Middle District of Florida, makes the Universal Service Fund whole, and provides damages to the Government for TracFone’s misconduct. Under the settlement, the Universal Service Fund will retain $10,927,372 in previously refunded overpayments and TracFone will pay an additional $2.5 million in damages to the Government. Further, TracFone has agreed to enter into a comprehensive, three-year compliance agreement to help ensure strict adherence to the FCC’s rules for the Lifeline program going forward.