The Lifeline Program: Examining Recent Allegations of Waste, Fraud, and Abuse

This interim report reviews the veracity of recent allegations of waste, fraud, and abuse in the Lifeline program. Additionally, this report seeks to examine what has been done – and what more can be done – by the Federal Communications Commission and the Universal Service Administrative Company (USAC) to address waste, fraud, and abuse. This review has included requests for information from USAC, a review of relevant documents, communications, and briefings with numerous Lifeline experts, including: non-confidential communications with officials from the FCC’s Wireline Bureau, Wireless Bureau, Enforcement Bureau, Office of the General Counsel, and Office of the Inspector General; officials from USAC; and representatives from five companies that offer Lifeline service. The following are preliminary findings:

• The evidence does not show $500 million of abuse of “IEH Overrides.” The evidence does confirm that a key assumption underlying this allegation—that every IEH Worksheet resulted in a duplicate phone being fraudulently subsidized—is wrong.
• Lack of adequate safeguards in the 2008 Lifeline expansion created the environment that led to increased waste, fraud, and abuse.
• Since 2010 the FCC and USAC have reined in a billion dollars in waste, fraud, and abuse. Nonetheless, more can be done.
• Lifeline continues to provide essential service to low-income Americans.
• The report makes the following recommendations:
• USAC should continue targeted audits and In-Depth Data Validations (IDVs).
• The FCC should periodically review Lifeline program data for new trends.
• 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.
• The FCC and USAC should review the use of the IEH worksheet and trends related to its use.
• The FCC should consider possible revisions to program safeguards.
• The FCC Office of General Counsel and the FCC Office of Inspector General should continue the investigation into these allegations.