FCC, DOJ, Tracfone Reach $13.4M Settlement on Lifeline Violations
The FCC and DOJ reached a $13.4 million settlement with Tracfone after a "detailed investigation" found the carrier enrolled "more than 175,000 ineligible customers" in the Lifeline program from 2012 to 2015, said a news release Monday. The investigation found…
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Tracfone "did not have adequate internal controls and other Lifeline compliance measures in place" and "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." A DOJ news release said Elite Promotional Marketing sales agents, who were hired by Tracfone, learned the company had a glitch in its computer software that allowed ineligible consumers to enroll. "Some agents in Florida then exploited the glitch to increase their consumer enrollments and commission payments," the release said: "After TracFone eventually discovered the software glitch in August 2015, it repaid more than $10.9 million to Lifeline, an amount that was credited as part of the $13.4 million settlement." Under the settlement, Tracfone signed a three-year compliance agreement and parent company Verizon will "oversee and audit" the carrier's Lifeline program. Tracfone will also pay $2.5 million in damages. “Lifeline providers have a duty to ensure that only eligible subscribers are enrolled,” said Michael Granston, DOJ Civil Division Commercial Litigation Branch deputy assistant attorney general. "Let today’s action serve as a warning to others that we will do everything we can to ensure strict compliance with the rules of the road," said Chairwoman Jessica Rosenworcel. Tracfone "reported these activities to the government years ago and we're pleased to now bring this matter to a close," emailed a spokesperson.