The Federal Communication Commission has accused Sprint Corp (NYSE:S) of defrauding customers of the Lifeline program. The agency says the company claimed millions of dollars in subsidies for close to 885,000 subscribers who weren’t using the service.
Sprint collected payments of 885,000 subscribers not in the program
FCC chairperson Ajit Pai has indicated that the company disregarded the commission rules and taxpayers and he has called for a full investigation on the issue. The chairman indicated that that was a violation of federal laws designed to curb abuse, waste, and fraud in the program. Pai stated that the Lifeline program was very important in the agency’s efforts to offer the digital opportunity to low income earners. It is therefore outrageous that Sprint could take millions of dollars form the programs for services they have not provided.
The 885,000 subscribers represent almost 30% of the company’s subscribers under the program and around 10% of Lifeline subscribers. The program offers a subsidy of $9.25 per month for low-income Americans on either broadband or phone plan. The FCC in 2016 reviewed the program and added a limit in a bid to prevent waste. If a subscriber does not use the service for a month, then the provider should initiate the process of taking them off the program.
Sprint claims the payment was an “error”
Sprint has however indicated that the acceptance of the payments was an “error” and it was willing to reimburse state and federal government of any undeserved subsidy they took. The FCC has not indicated how long the company took before removing the customers from the program.
According to the company, the issue supposedly started in July 2017 when an error occurred when they tried implementing the 30-day de-enrolment prerequisite. Sprint says that when they noticed the error, they started investigations immediately and they informed state regulators and FCC. However, the FCC indicates that the issue became apparent following a probe by the Public Utility Commission of Oregon.
The introduction of the 30-day rule was to prevent service providers from exploiting the program.