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Rampant Free Cell Phone Plan Abuse

William Whiteman of Centerville has a lifeline phone that he says he needs and wants abuse of the program to end so he can continue the use of the phone.

A Dayton Daily News investigation found that some 26,000 Ohioans are fraudulently receiving free cell phones and minutes under a Federal Government program intended to expand universal access to telecom services to low income families.

Lifeline cell phone programs have grown rapidly in Ohio due to the entry of several new free cell phone carriers and heavy promotion of the program locally.  A recent investigation discovered that 26,500 Ohioans are fraudulently receiving free cell phone service and have been notified that they are violating the program rules.  All applicants that apply to free government cell phone programs must swear under injury of perjury that they all of the information in their application is truthful and accurate.  Presently, it is not clear if local authorities will press charges against individuals found abusing the free cell phone plans.

These free government cell phone programs are paid for by fees from telecom service providers (telephone companies, wireless phone companies, paging companies, etc) by the Universal Service Fund, a federally mandated program who is tasked with expanding universal access to telecom services for low income households.  These fees, refereed to as Universal Service fees, are usually past on to the telecom service companies’ customers.

These fees are then redistributed by the Lifeline and Link Up Federal Government programs to phone companies that offer free government phone service.  Companies that provide the free government cell phones receive a ten dollar subsidy from the US Government every month for each subscribing customer.

The Lifeline and Linkup programs has been in existence since the 1980s and provided subsidized land line service to low income households.  However, in 2005 a change to the program to include cellular phone service in the program has lead to rapidly increasing costs and very little oversight of the one Lifeline phone (land line or cell phone) per household rule.

In Ohio alone, enrollment in the Lifeline program has grown from 280,000 in 2008 to close to 600,000 this year, and the cost of the program has ballooned from 30.4 million in 2008 to 58.9 million  in 2010.

Some of the growth in the program is a reflection of the poor economic times Ohio is facing and the heavy promotion that the multiple free cell phone operators in Ohio employ.

However, it has been found that a significant portion of the rapid growth of free government cell phone programs is due to people taking advantage of the program.  There is no communication between the various free government cell phone programs and this has allowed unscrupulous individuals to defraud the program by applying for and receiving multiple free government cell phones.

Letters were sent out in mid November to 26,500 people in Ohio (close to 5% of all subscribers) who were suspected of signing up for more than one free cell phone plan.  The letters gave the phone users 35 days to choose one phone carrier.  It is believed that that these individuals could be responsible for up to 3.18 million dollars a year in over payments (This figure does not take into account the cost of the free cell phones given to each person, which could be up to 5.3 million dollars (assuming a 20 dollar value for each cell phone distributed).

The letters are a part of an ongoing effort by the Federal Communications Commission that has already identified close to 270,000 people in 12 states suspected of abusing the program.

There are currently four cell phone operators in Ohio operating under the Lifeline and Link Up programs, with four more operators awaiting approval to begin service.  The two largest cell phone operators are Assurance Wireless, a Virgin Mobile subsidiary, and Safelink Wireless, a TracFone subsidiary.

“The … program itself, which provides subsidized cellphones, has been subjected to a lot of waste, fraud and abuse,” said Tom Schatz, president of the advocacy group Citizens Against Government Waste. “People were getting multiple cellphones, they were selling them on Craigslist, so clearly people know how to take advantage of a program like this.”

However, there are many deserving free cell phone users who see the program as a blessing and rely on their phones to stay in contact with family, potential employers, and for use to call 911 in emergency situations.

It is clear that more oversight is required for free government cell phone programs is needed to stop fraudulent use and to reduce further waste.  When these programs are properly instituted they provide a valuable social service that allows more Americans to find and keep jobs- something that many people in this dreary economy desperately need.

For more information on free government cell phone programs, please follow the link below:

Free Government Cell Phones

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