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Verizon-owned TracFone to pay $23.5 million over Lifeline issues

The prepaid brand misrepresented some Lifeline and Emergency Broadband Benefit claims several years ago.

The prepaid brand misrepresented some Lifeline and Emergency Broadband Benefit claims several years ago.

BLANK TracFone Logo TD
The logo of Verizon’s prepaid subsidiary TracFone. (Graphic by The Desk)

Verizon’s prepaid wireless subsidiary TracFone will pay around $23.5 million in fines to the Federal Communications Commission (FCC) following an investigation into alleged violations concerning the national Lifeline and Emergency Broadband Benefit (EBB) programs, the agency announced on Thursday.

The issues were self-reported by TracFone to the FCC in 2021, shortly after Verizon acquired the prepaid brand, noting that some of its internal processes had led to some errant claims on behalf of Lifeline customers who had not actually used their service within the appropriate 30-day window.

Among other things, TracFone said its internal systems wrongly filed claims on behalf of customers who merely received an incoming text message, even though there was no indication that the customer made a phone call, sent a text or took any other action on their own that would constitute “use” of their Lifeline-subsidized line. Similarly, TracFone also noted that some customers who received both Lifeline and the Emergency Broadband Benefit subsidy during the coronavirus pandemic may have had claims filed on their behalf, even though the customers didn’t use the service during the claim period.

“Whether attributable to fraud or lax internal controls, or both, we will vigorously pursue allegations of misconduct that harms critical FCC programs designed to help those most in need of communications-related services,” Loyaan A. Egal, the Enforcement Bureau Chief at the FCC, said in a statement on Thursday. “This settlement sends a strong message that we are determined to protect the integrity of these programs.”

It is not the first time TracFone has been scrutinized by the FCC over problems with its handling of Lifeline customers. Earlier, TracFone agreed to reimburse the FCC’s Universal Service Fund more than $22.654 million related to errant Lifeline claims and over $17.8 million connected to EBB program funds between 2019 and 2021, the FCC said.

TracFone also affirmed that some of its field representatives knowingly falsified tax documents in order to sign up more customers for Lifeline, the FCC said. The field staffers were compensated for each customer they signed up, an incentive that is prohibited by the FCC’s Lifeline rules.

In this most-recent instance, TracFone has agreed to pay $17.487 million to resolve the matter concerning the Lifeline and EBB investigation, and an additional $6.013 million to close a separate matter from three years ago over Lifeline issues.

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About the Author:

Matthew Keys

Matthew Keys is the publisher of The Desk and reports on the business and policy matters involving the broadcast television, streaming video and radio industries. He previously worked for Thomson Reuters, Disney-ABC, Tribune Broadcasting and McNaughton Newspapers. Matthew is based in Northern California, has won numerous awards in the field of journalism, and is a member of IRE (Investigative Reporters and Editors).