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9 Investigates abuse of free cellphone program Lifeline

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ORLANDO, Fla. - 9 Investigates discovered every time you pay your cellphone bill you fund a government program designed to make sure everyone in need has a phone for emergencies.

The so-called Lifeline program was started for landline phones and was later expanded to cellphones under President George W. Bush’s administration.

But 9 Investigates also found some are abusing the program. In fact, one local woman told Channel 9's Vanessa Welch that it is easy to get multiple phones.

She agreed to talk to Welch as long as her identity was not revealed.

"It’s always nice to have an extra phone,” the woman said. 

She bought herself a smartphone, but she also has four other phones that she admits were paid for by cellphone customers.

Welch asked her how tough it was for her to get four phones through the government’s Lifeline program.

"It wasn’t tough at all,” she responded. “I just changed my name and address, and I was able to get multiple phones."

The Lifeline program allows one phone per household for lower income people who qualify. Jennifer Ayala, who has a son with a serious medical condition, qualified for the program and truly needs the service.

She has used her Lifeline phone to make emergency medical calls for her son but now she worries those abusing the program will ruin the service for people who really need the phone.

"Why do you need three phones?" Ayala asked.

9 Investigates found records showing  more than 46,000 Floridians somehow got more than one free phone.  And you pay for them every time your cellphone bill arrives. The $2.15 universal federal service charge funds the Lifeline program.

The program's cost has exploded. Since 2009, it has cost paying cellphone customers $478 million in Florida alone.

Cellphone companies providing the phones to Lifeline recipients are reimbursed by the government.

Welch found companies signing people up where they apply for food stamps  

She confronted one of the workers and asked, "Are you encouraging people to sign up for more than one phone?"

The woman, who works for SafeLink Wireless, told Welch she was not allowed to speak with her.

SafeLink’s parent company was fined by the government for allowing people to sign up for multiple phones.

We don’t know which company approached  the woman who told us she was able to get four phones under the Lifeline program. But  she said she was encouraged to apply for more phones.

"I let him know I already have four phones and he was still trying to get me to sign up," the woman told Welch.

“What is their motivation?” Welch asked.

“To get the money,” the woman responded.

And that’s why she says she doesn’t feel guilty that you’re  paying for her phones.

“No, I don’t feel bad because they allowed it,” she said.

The government is working to stop this problem. The Federal Communications Commission created a nationwide database  of subscribers. It would prevent people from going to different carriers to get multiple phones.

The database will be activated in Florida next month. 

Other reforms are expected to save the program  $2 billion dollars by the end of 2014. The FCC said it has eliminated  approximately 2.2 million duplicate subscriptions since mid-2011, saving the Universal Service Fund approximately $260 million.

The agency also completed 13 investigations resulting in more than $90 million in proposed fines.

As for TracFone, SafeLink’s parent, it is contesting the FCC fine and said it didn’t violate any rules.

TracFone Responds to FCC Action on Lifeline Abuses

“Last night, we learned that the Federal Communications Commission (FCC) is disputing TracFone Lifeline wireless billing involving less than $8,000 and involving fewer than 850 people. With almost 4 million Lifeline customers, obviously this is a very small percent.

“We will respond to the FCC at the appropriate time. However, we do not believe that our conduct violated any rules or that the proposed FCC action is warranted. We believe that we have the most sound program in the industry when it comes to wireless Lifeline. TracFone has been a leader in both innovative wireless Lifeline services and in preventing program abuses. We have proposed many reforms to prevent waste, fraud and abuse of Universal Service Fund resources. Some of those proposals were included in the FCC’s 2012 Lifeline rules. And TracFone continues to propose additional fraud prevention measures including a ban on in-person distribution of handsets associated with Lifeline services.

“Our goal at TracFone Wireless has always been to do whatever it takes to clear up any such issues as expeditiously as possible. We will have no additional statement on this matter until we submit our response to the FCC.”