Cutting the Cord on Lifeline Fraud

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Lifeline, a federal subsidy program that provides discounted phone service for qualifying low-income consumers, ensures that Americans in every state, territory and commonwealth, including Tribal lands, have access to affordable communication services. Recipients of the benefit are required to have income at or below 135 percent of the federal poverty guidelines, or participate in a qualified state, federal or Tribal assistance program. The Knoxville News Sentinel reports that authorities have identified two phone companies that allegedly used forged records to receive federal funding under the Lifeline program.

The story details that former sales agents of an Oklahoma City-based telecommunications company and its affiliate allegedly fabricated and signed application records in order to receive a portion of the government benefits from Lifeline. In addition, the story reports the two telecommunication companies received nearly $90 million in 2012 from the Lifeline benefits program, which annually disburses $2.2 billion. (That works out to about $9.25 a month per approved customer.)

The investigation, prompted by several members of Congress, is currently analyzing how one of the companies acquired more than 30,000 new customers in the State of Indiana considering the company reportedly had no full-time employees located in the Hoosier state. The Indiana Utility Regulatory Commission stated that one of the telephone companies approved applications for people who claimed to live in homes that were vacant or abandoned.

The Federal Communications Commission (FCC), which operates the Lifeline subsidy program, has been criticized by authorities for not doing a better job at policing the program. In this particular case, the two telecommunication companies have agreed to cooperate with state regulators to improve safeguards against fraud and abuse. (Good move!) As the investigation continues, they are required to stop accepting new customers for 90 days, while purging their database of customers who are not eligible for the subsidy program. After listening to witness statements at the next hearing, the commission will determine how to proceed.

Clearly, the facts in this case are still under investigation, and I won’t speculate about the outcome. The circumstances alleged in the article remind us, though, how easy it could be to perpetrate fraud against this program that literally extends a communications ”lifeline” to deserving and eligible beneficiaries. So, what advice would you give to the Lifeline program to close this potential loophole on fraud?

Source: Today’s ”Fraud of the Day” is based on an article titled, ”Lifeline Program Review Finds More Evidence of Fraudulent Applications for Federal Phone Subsidy,” written by Isaac Wolf of Scripps News and published in the Knoxville News Sentinel on December 3, 2013.

Indiana authorities have found more evidence of fraudulent applications for Lifeline, the federal phone subsidy for low-income families.

In testimony filed last week, state investigators charged that their review of troubled phone company TerraCom’s Lifeline business revealed application signatures that didn’t match the names on forms. Also, said Pamela Taber of the Indiana Utility Regulatory Commission, TerraCom approved applications from people claiming to live in homes that — upon inspection — turned out to be vacant or abandoned.

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Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.