By Yuliya Chernova
Efforts to reduce fraud in a program that subsidizes phone bills
for low-income Americans may be resulting in a large number of
eligible customers being dropped from its rolls.
Under the Federal Communications Commission program, called
Lifeline, phone companies receive money for providing discounts to
low-income customers. In 2012 the FCC passed new regulations
designed to reduce fraud in the program, including a requirement
that all beneficiaries certify their eligibility annually. That led
to significant declines in enrollment. But this year's drop was
especially large.
In New York State, for example, about 62,000 people, or 62% of
Verizon Communications Inc. landline customers who were receiving
the Lifeline benefit last year, were deemed ineligible as of
January, according to a document Verizon filed with the FCC.
It appears that a new certification procedure, as well as a new
identity-verification system, both introduced last year, are
causing problems.
Among those dropped are people who appear to qualify based on
the program's criteria. Sofiya Altshuler, of Brooklyn, N.Y., said
she was surprised when she received a Verizon bill for $59.89 in
February, up from $6.31 in January. According to documents reviewed
by The Wall Street Journal, Ms. Altshuler remains a recipient of
several programs such as Supplemental Security Income and Medicaid
that the FCC counts as qualifying for Lifeline.
Some previous beneficiaries of the program also said Verizon had
been unresponsive to their complaints about being dropped.
"They are torturing us," said Bella Kamenetskaya, a resident of
Brooklyn, who said she spent hours on hold with Verizon's customer
service and faxed her father's Lifeline applications several times
with supporting documentation to no avail.
New York state and city lawmakers, among them City Council
Member Margaret Chin, state Sen. Daniel Squadron and Assemblyman
Sheldon Silver, on April 17 sent letters to Verizon and the FCC
detailing problems their constituents faced and asking for
fixes.
"We are looking into the situation," said Mark Wigfield,
spokesman for the FCC.
John Bonomo, spokesman for Verizon, acknowledged the large-scale
dropping of customers from the program and said that although it
wasn't limited to New York, "New York was the bulk of it."
Tracfone Wireless, a large provider of wireless phone service to
Lifeline subscribers in New York, doesn't appear to have similar
problems. According to documents it filed with the FCC, just 8% of
its Lifeline customers were deemed ineligible this year.
Mr. Bonomo said last year was the first time that Verizon asked
Universal Service Administrative Co., or USAC, to conduct the
recertification process in New York. USAC is an independent
not-for-profit organization that administers the Lifeline problem
under the direction of the FCC.
USAC was given the authority to conduct recertification under
the 2012 FCC revision. About 2% of Lifeline customers around the
country were being recertified by USAC for the first time last
year, according to the FCC.
Mr. Bonomo said that an unusual number of Lifeline customers
didn't respond to requests to confirm their eligibility. "They
disregarded it. You get junk mail and you toss it," Mr. Bonomo said
is the assumption that Verizon has at this point.
Mr. Wigfield of the FCC said that "to address some of the
problems experienced this year," the FCC is making changes in how
USAC will handle the recertification process, including giving
carriers more time to update contact information of consumers.
Getting back on the program's rolls is proving difficult for
some customers.
Despite faxing her application with supporting documentation
twice, Ms. Altshuler said she still isn't back in the Lifeline
program.
Mariam Khachatryan, who directs a social assistance program for
about 1,200 Brooklyn residents who are Holocaust survivors from the
former Soviet Union, said her clients were surprised by much higher
phone bills and that many haven't been able to reinstate
benefits.
"This is very, very upsetting for elderly people, these high
bills for no reason," Ms. Khachatryan said.
Last year the FCC authorized USAC to start using a new
identity-verification system for all applicants as a result of the
2012 revision, according to USAC representative Philip "Pip"
Colvin.
Mr. Bonomo said that Verizon found that many of its Lifeline
applicants couldn't be verified in this new system, but it isn't
clear why.
Mr. Colvin said that problems were caused in some instances by
incorrect information sent to USAC about applicants by phone
providers. He said he didn't have information as to what percentage
of Lifeline applicants failed in verifying their identities via the
new system.
Verizon added 70 people to handle the unexpected influx of
requests, Mr. Bonomo said. "We feel that now we are pretty well
caught up," he said, declining to provide a figure of how many
applicants were reinstated.
Mr. Bonomo declined to say how much money Verizon collected from
customers who were dropped from the discount program. He also said
that there is no plan to reimburse customers, and that they would
get the Lifeline discount once their application process is
completed on future bills.
In 2014 the Lifeline program spent $1.6 billion to discount 12.4
million phone lines.
Write to Yuliya Chernova at yuliya.chernova@wsj.com
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