Gov. cellphone program rife with abuse

BUFFALO, N.Y. (WIVB) - If you have a phone that offers long distance, then you are probably paying for free cellphones or landlines for the less fortunate. It's part of the Universal Services Fund, through the federal government.

Since the 1980s the federal government has been offering up free phones for the needy through a subsidy. Those enrolled in programs like Medicaid, food stamps, and HEAP automatically qualify.

In 2005, the rules changed allowing cellphones to be added to the mix. Then in 2008, the first pre-paid cellphone entered the market. From there, subscribers to the program began to soar. In March of 2005, there were 7.2 million enrolled. Fast-forward to March of this year there were 17.1 million subscribers.

"I understand this program started under Ronald Reagan, but at the time the economy was different. We've got to be really tough about tightening our belt," said Congresswoman Kathy Hochul.

"The cupboards are bare, we're spending beyond our means, and while we do have an obligation as government to take care of the most vulnerable and those that need assistance, there is a line. Let's face it, we didn't use to have cellphones and so that begs the question why someone now thinks that's a necessity," added Congressman-elect Chris Collins.

For Patricia Frank, she says it is a necessity. As a senior citizen, she says it's all about safety and emergencies.

"I was diagnosed with vertigo about four years ago and I have a tendency to be very tipsy," said Frank.

In fact, she's fallen quite a few times and is unable to get up. The cellphone gives her security. She carries it everywhere she goes, just in case.

"I have fallen in the yard and I've had the phone so I could reach my grandson and he's come for me," said Frank.

For many senior citizens on fixed incomes, it is a lifeline for them. That's why for Frank and senior citizen Richard Clark, it can be frustrating knowing there are so many abusing the program.

"Now the program is going not to the needy, but the greedy," said Clark.

The greedy, who have not one cellphone, but multiple phones. The FCC tells News 4 abusers of the program can get more than one phone by going to different cellphone companies, or companies are handing out more than one.

"I've seen people with multiple cellphones, like an old acquaintance I'd run into. They'd tell me here's a bunch of my phone numbers if this one runs out of minutes call this one. If that one doesn't have any minutes call me on that number. You'll see three, four, five cellphones in their possession at one time," said one man on Lifeline.

"It's not hard at all. All you have to do is use a family member's address and family member's name and you could use your own name and use someone else's address, but again the government is very lax on double dipping," said Clark.

If you take a look at your cellphone bill, you'll probably find the Universal Service fee. This charge pays for the Lifeline program. Any phone company that offers long distance must pay into the fund. Most reclaim that money from subscribers.

Federal rules prohibit eligible low-income consumers from receiving more than one Lifeline discount per household. It can be a landline or cellphone, but not both. The problem is there has been a gross amount of abuse.

A spokesman for the FCC tells News 4, the proper controls haven't been in place in the past. In January, the FCC overhauled and reformed the program. Since the beginning of the year, $43 million has been saved by getting rid of duplicate subscribers and unnecessary subsidies. The FCC is hoping to save $2 billion over the next three years.

But many say it may not stop the problem.

"They just basically buy them off of people on the street that need it, that have the cellphone and need the money. They buy cheap for $20 and they have 250 minutes a month for as long as they want," said the man who asked us to conceal his identity.

The FCC is creating a database that will help prevent repeat subscribers. Local lawmakers would like to see all the abuse end.

In a letter to the FCC, Congressman Brian Higgins writes, "I understand the goals of the USF program to provide low income families with a jump start to purchase phone plans and service. However it is unfair to ask working families of western New York to pay for free cellphones and minutes for their neighbors."

Collins added, "What the public may not realize is if you have a cellphone that's charged up and you're not on a plan you can dial 911 and someone answers."

The database is expected to launch next year. Lifeline subscribers violating the single phone rule may be subject to criminal and civil penalties.

Here is a summary of the FCC’s reforms of Lifeline:

• Ongoing investigations into potential Lifeline fraud by the FCC’s Enforcement Bureau
• On track to save at least  $200 million from reforms this year
• Codified rules limiting Lifeline subscriptions to one per household
• Reviewed over 7 million subscriber records and eliminated over