‘Obama Phone’ Program Vulnerable To Fraud, Government Audit Reveals

The so-called Obama Phone initiative is subject to rampant fraud, according to a report from the U.S. Government Accountability Office, which is Uncle Sam’s watchdog agency.

Officially called the Lifeline Program, it distributes free cell phones to low-income Americans who receive food stamps, Medicaid benefits or other such assistance. Lifeline is funded by consumers through the universal service charge on your monthly phone bill.

Although the program started under the Reagan administration when it was all landlines, it mushroomed under the Obama administration and was made famous by the Obama phone lady in a September 2012 video (embedded below). According to the Obama Phone website, 20 million-plus Americans have obtained a free Obama Phone.

In its detailed, 89-page report, the GAO found, among other things, that in sifting through a large sample of Lifeline phone recipients, only 36 percent appeared to be actually enrolled in one of the government welfare programs that made them eligible for a free device. That suggests that the eligibility of about 64 percent of the beneficiaries couldn’t be verified.

In a separate sting operation, GAO investigators used fake documents to apply at 19 wireless providers and qualified for Obama Phones at 12 of them. GAO also discovered that about 5,500 persons might have improperly qualified for two phones, while about 6,000 currently in the Lifeline Program have no life as they are dead.

Feds find fraud in the Obama Phone program
[Image by Charles Dharapak/AP Images]

“The fraud reached unheard-of proportions because the Federal Communications Commission let the task of screening for eligibility fall to phone companies that profit off of enrolling as many people as possible,” The Daily Caller asserted.

“The cause of the fraud rates, shocking even by federal government standards, was always clear: The FCC allowed companies with a profit motive to sign up as many people as possible to determine eligibility…The companies weren’t checking eligibility, and the FCC wasn’t ensuring they did or punishing those who didn’t. Additionally, the FCC failed to provide many companies with the intra-government databases that would give them the ability to perform some checks, the GAO found.”

Related story:

‘Obama Phone’ Workers Reportedly Fired After Undercover Video Surfaces

In another revelation that suggests a lack of oversight, about $9 billion collected by the wireless industry for the Lifeline Program is currently stashed in a private bank account rather than under the control of the U.S. Treasury Department.

GAO says Obama Phone program subject to fraud
[Image by Alex Brandon/AP Images]

The FCC under new Chairman Ajit Pai is trying to crack down the program, and the GAO report provides various additional recommendations for the agency in that context, including maintaining state eligibility databases that wireless providers can access to confirm an applicant’s entitlement to a free cell phone.

In 2016, before he was named chair of the agency, Pai launched his own investigation and “his office uncovered several forms of widespread fraud that lacked agency safeguards, including millions of duplicates and potentially hundreds of thousands of ‘phantom’ subscribers enrolled since October 2014 without being verified in a national database,” Inside Sources noted.

U.S. Senator Claire McCaskill (D-Missouri), who prompted the audit, reacted to the GAO study, the Washington Times detailed.

“A complete lack of oversight is causing this program to fail the American taxpayer — everything that could go wrong is going wrong. We’re currently letting phone companies cash a government check every month with little more than the honor system to hold them accountable, and that simply can’t continue.”

Before the 2016 presidential election, Ajit Pai discussed the Obama Phone program on the Fox Business Channel.

[Featured Image by file404/Shutterstock]