McCaskill: We cannot blindly trust companies who make $1.5 billion every year from the Lifeline program

WASHINGTON – U.S. Senator Claire McCaskill, the top-ranking Democrat on the Homeland Security and Governmental Affairs Committee, demanded answers from the Federal Communications Commission (FCC) Chairman in a hearing today on what he is doing to reform the Lifeline program, which provides low-income households with discounts on telephone and broadband service, and hold companies accountable for years of documented waste, fraud, and abuse.

Click HERE to watch McCaskill’s questioning of FCC Chairman Ajit Pai.

The hearing focused on a McCaskill-requested Government Accountability Office (GAO) report released earlier this year that found that companies received millions of dollars for enrolling Lifeline subscribers, despite failing to check participants’ eligibility and signing up thousands of fictitious or deceased individuals. “The combination of ineffective oversight and the greed of some private carriers has led to hundreds of millions in wasted taxpayer dollars,” McCaskill said. “The incentives are in the wrong place…You don’t tell [companies] that they get to verify whether or not somebody needs a phone when they’re the ones that are going to make the money if they verify the phone…It does not take an auditor to tell you that it might not be the best idea to blindly trust the companies who receive $1.5 billion [every year] from this program.”

The McCaskill-requested report detailed numerous problems and vulnerabilities ranging from an inability to verify the eligibility of over one-third of selected participants, to providing Lifeline benefits to fictitious or deceased individuals, to auditing less than one-half of one percent of the telecommunication providers responsible for providing service. The investigation also found that over $9 billion in Universal Service Fund (USF) funding—which pays for the Lifeline program as well as three other USF programs—is kept in a private bank account, rather than the U.S. Treasury.

McCaskill began her oversight of the Lifeline program in 2011, when she urged the FCC to provide stronger oversight of the program, resulting in the FCC issuing new orders to crack down on waste, fraud, and abuse. Following continued problems with the program, McCaskill used a Senate Commerce Committee hearing to urge the FCC to take action to prevent fraud. She also requested that the FCC refer possible criminal violators in the program to the Justice Department for criminal investigation, and subsequently the Justice Department indicted three men charged with defrauding the program of approximately $32 million. Following the release of the McCaskill-requested GAO report earlier this year, Republican Senators Ron Johnson of Wisconsin, Rob Portman of Ohio, and Democratic Senator Tom Carper of Delaware joined McCaskill in calling for the GAO to share information from its investigation with the FCC and FCC OIG so the agency and its inspector general can further investigate and pursue enforcement actions as warranted.