Latino Group Wants to Expand Fraud-Ridden ‘Obamaphone’ Program

September 3, 2013 - 3:33 PM

Cell Phone Threat

(AP Photo)

(CNSNews.com) – The real problem with the Lifeline Program that provides free cell phones – commonly known as “Obamaphones” – to low-income individuals is not that it’s been abused, but that not enough low-income Latinos are using the subsidized phones, according to The League of United Latin American Citizens (LULAC).

“Probably about 30 to 35 percent of the people who qualify for Lifeline would be Latino, and yet only about 15 percent of the users of Lifeline are Latino,” Brent Wilkes, executive director of LULAC, said in a conference call Wednesday.

When CNSNews asked for a comment on documented reports of fraud and abuse in the “Obamaphone” system, he replied, “From our perspective, it’s not that there’s too much use, it’s actually too little.”

“Not every wireless carrier perhaps has been as vigilant as some,” Wilkes offered as an explanation for fraudulent activity, adding, “I don’t have a lot of evidence about drug dealers using the phone and things like that, I mean, if anything they should be able to pay for them.”

“I don’t have any particular comment on that except to say that . . . the criminal mind will use all kinds of tools for nefarious purposes,” Nicholas Sullivan, fellow at the Center for Emerging Market Enterprises at Tufts University's Fletcher School, added in response to CNSNews’ question.

Sullivan authored a 2011 report, "Subsidized Cell Phones Provide Significant Economic Gains for Poor and Near-Poor Americans," which touts the economic benefits of subsidized phones, finding that each Lifeline phone has been “generating an average of $259 per participant per year.”

“$3.7 billion in fresh income could be generated for the poor by making Lifeline-subsidized free cell phones available to all eligible low-income Americans, including Latinos,” Sullivan said during the conference call, noting that “there has been a lot of chatter in some sections of the Congress” about possible waste in the program.

The Federal Communications Commission’s (FCC) Lifeline assistance program began in 1985 to give “a discount on phone service for qualifying low-income consumers to ensure that all Americans have the opportunities and security that phone service brings.” It was expanded in 2005 to include “pre-paid wireless service plans in addition to traditional landline service.”

Eligible recipients must have an income “at or below 135% of the federal Poverty Guidelines” or participate in assistance programs such as Medicaid or food stamps. They are also prohibited “from receiving more than one Lifeline discount per household.”

But an FCC review last year revealed that the eligibility of 41 percent of Lifeline phone recipients had not been verified. A Maryland woman told reporters last year that she easily collected 30 free phones, all active. In a Project Veritas video released by activist James O’Keefe in June, an undercover investigation on the issuance of Lifeline phones revealed vendors giving out phones despite being told the phones would be sold for money and drugs.

An FCC press release notes that over $214 million was “saved in 2012 by cutting waste, fraud, and abuse” and the target for 2013 is “an additional $400 million.”

“The program was comprehensively reformed in January 2012 to go after duplicates, to go after ineligible consumers, to go after companies, and so forth,” FCC spokesperson Mark Wigfield told CNSNews.

One of the 2012 reforms requires “consumers to re-certify annually that they’re still eligible,” Wigfield said. “The first time we did the recertification was this year and there were substantial numbers of people . . . who were in fact removed from the rolls.”

Wigfield explained that a database is currently being created for providers to tap into “when they sign up a new consumer and if that consumer is in there, then they can’t get service so that’ll be like a one-stop shop for stopping any possibility of duplicate subscriptions.”

Wigfield confirmed that the FCC does not have data on the transition of recipients away from the subsidized service. The FCC “follows the will of Congress,” he added. If Congress “wants to change the program, that is Congress’ prerogative.”

Wilkes noted that “Hispanics will account for 52 percent of our nation’s total population growth” throughout the coming four decades and will “make up 74 percent of the growth in the nation’s labor force from now until 2020.” The 11.3 percent unemployment rate among Latinos suggests that “having a wireless phone can make the difference between someone receiving the call for a job interview or missing that opportunity altogether.

“Hard-working Latinos in this country are not asking for a handout, but rather a connection to modern communications enjoyed by the vast majority of Americans,” Wilkes explained. “LULAC strongly believes that the program must be preserved with all the necessary regulations, particularly in light of the fact that eligible low-income Latinos are under-enrolled in the federal program.”

The program has been “very popular” and “very successful,” according to Wilkes, who cited data of an estimated 140,742 Latino subscribers in New York, the highest in the country. “When it works, that means people are getting job opportunities and at some point they will move up the income ladder and won’t need to have the subsidized service anymore.”