Released: August 13, 2013

Three organizations call on FCC to save vital Wireless Lifeline by blocking carrier abuses

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WASHINGTON, D.C., August 13, 2013 — The Federal Communications Commission (FCC) made progress in 2012 when it enacted reforms to address abuses in the wireless Lifeline program that is essential for millions of low-income Americans, but further “common sense” action – particularly a ban on same-day distribution of such cell phones – is needed to prevent abuses by certain wireless carriers, according to three major U.S. consumer and low-income organizations: the Community Action Partnership, Consumer Action, and the National Consumers League (NCL).

Community Action Partnership, Consumer Action and NCL, which together represent more than 9,000 community-based organizations, across the United States, held a news conference today to emphasize that low-income Americans are unfairly being tagged for concerns about the Lifeline wireless program, when, in fact, a small number of cell phone companies are responsible for aggressive distribution tactics that have raised concerns in Congress and elsewhere.

The groups applauded the FCC for taking initial steps to address concerns about Lifeline. Already, the 2012 reforms enacted by the FCC already have reduced spending on Lifeline from $2.2 billion to $1.8 billion.

Linda Sherry, director of national priorities for Consumer Action, said: “The Lifeline program – including the portion focused on wireless service – is of vital importance to millions of America’s low-income seniors, veterans and people of color. It is unfortunate that certain carriers are violating at least the spirit of the existing rules that govern the Lifeline program. We believe that the FCC can take reasonable additional steps to crack down on these ‘bad actors’ and effectively curb the abuses. We don’t want to make it harder for people who need Lifeline help to get it. At the same time, we recognize that the problem marketing practices have to end. It is important to us and the thousands of local organizations that we represent that everyone understands that Wireless Lifeline-related concerns can be addressed and are a reflection only on the companies involved, not the millions of Americans who need this assistance for health, safety and other reasons.”

John Breyault, vice president of public policy, telecommunications and fraud at National Consumers League, said: “Millions of low-income consumers depend on the Lifeline program to fulfill the basic need to communicate. As a society and a government, we made the progressive decision that all citizens should be connected to basic telephone service. The Lifeline subsidy is an important part of that social contract. As the nation’s pioneering consumer advocacy organization, we will not turn our back on citizens who depend on this program and neither should the FCC. The reforms already enacted by the Commission have done much to safeguard the long-term viability of the Lifeline program. Today, we join with our fellow advocates in calling on the Commission to further protect the program, by ensuring that bad actors can no longer defraud Lifeline through same-day distribution of handsets.”

Donald W. Mathis, president and CEO of the Community Action Partnership, said: “Our members work with their clients to help provide for Lifeline wireless the proof of enrollment in a qualifying program, such as Social Security disability. However, it is up to the carriers to do the verification. We believe that ending same-day distribution of Lifeline wireless cell phones will go a long way to eliminating the incentive for some carriers to ‘game the system.’ This common-sense reform would be a significant step to quieting concerns about this vitally important program. Lifeline wireless is too important to too many people including the close to 17 million individuals that community action agencies serve to allow a few bad apples in the cell phone industry to ruin it for everyone else.”

The groups are among those who have applauded the FCC as follows:

“… we are writing to reiterate our strong support for the wireless Lifeline program, and to applaud the Commission’s efforts to rein in waste, fraud and abuse in the system. Specifically, we support the reforms enacted in early 2012, including:

• The creation of a National Lifeline Accountability Database to prevent multiple carriers from receiving support for the same subscriber;
• Requiring providers to de-enroll Lifeline subscribers who have not used the service for a consecutive 60-day period; and
• Requiring providers to verify annually the initial and continued eligibility of their lifeline subscribers.

While these changes have shown success in reducing fraud rates, problems with the program persist. To ensure the continued success of the Lifeline program, more reforms are in order. It is for this reason that we strongly support the Commission’s Public Notice soliciting comments on … [a proposal] to "promptly commence a rulemaking proceeding to amend the rules governing the Lifeline program to prohibit in-person distribution of handsets to prospective Lifeline consumers."

Under the pending proposal, the FCC would require eligible telecommunications carriers (ETCs) to provide handsets to the Lifeline subscribers via the U.S. mail or an approved delivery service only after the ETC has verified the applicants’ eligibility in accordance with the Commission’s rules.

Commenters agree with the statement in the proposal pending before the FCC that "Prohibiting in-person wireless Lifeline handset distribution would materially reduce the incidence of fraudulent enrollment caused by unscrupulous providers or overzealous agents enrolling customers in Lifeline programs without properly verifying customer eligibility." This step would both prevent and detect abuses while ensuring that wireless Lifeline-supported service remains available for those who qualify.

Lifeline provides vital telecommunications access to seniors, veterans and low-income Americans in every state, territory and commonwealth. We applaud the Commission’s anti-fraud efforts and efforts to continue to help connect all Americans to vital telecommunications services.

According to the FCC and the carrier statistics, about 75 percent of all participants in the Lifeline program choose wireless service over a landline service. In fact, according to a 2012 study from the National Center for Health Statistics, more than a third of all U.S. households are “landline free” and rely strictly on wireless telephones, and that number continues to grow.

The groups noted that Americans with cell phones benefit in terms of safety, health, employability, and strength of family … and that low-income consumers should be no different.

The organizations are urging that Lifeline wireless not be capped so that the millions of eligible but unserved Americans can benefit from the important program.

About the groups

Consumer Action is a national non-profit advocacy and education organization that has served consumers since 1971. Consumer Action has a national reputation for multilingual consumer education and advocacy in the fields of credit, banking, privacy, insurance and utilities. Consumer Action’s nationwide network of more than 8,000 community-based organizations enables it to reach millions of consumers—in their own languages and in their own communities.

The Community Action Partnership is the nonprofit, national membership organization representing the interests of the 1,100 Community Action Agencies (CAAs) across the country that annually help 17 million low-income Americans achieve economic security. Whether it's a Head Start program, Weatherization, job training, housing, food bank, energy assistance, financial education, or any of the more than 40 distinct programs, CAAs work to make America a better place to live.

The National Consumers League, founded in 1899, is America's pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit the NCL website.

Click here to view a streaming audio replay of this news event (available by 5 p.m. EDT on Aug. 13, 2013).