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Obamaphone program plagued by fraud; yet another government handout gone awry

February 9, 2015

2/7/2015

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In yet another example of a federal entitlement program being fraudulently misused, a Denver television station has exposed employees of a national telecom company giving away free cell phones and service contracts to undeserving citizens under the Lifeline wireless program.

The Lifeline wireless program, also commonly known as the Obamaphone program, was first implemented in 2005 under George W. Bush and was designed to provide discounted cell phones and phone service to needy Americans, so that they would have access to emergency services and a means of communicating with family and loved ones.

The program was greatly expanded by the Obama Administration — hence the nickname “Obamaphone” — and in the first six months of 2014 alone, more than 13 million phones were handed out. The program costs well over $2 billion per year, and the charges are added to the monthly bills of regular cell phone customers in the form of what is called a “Universal Service Tax.”

To qualify for a free phone, a person must prove that they are receiving government assistance, such as food stamps, Medicaid or other such aid.

The Denver news station CBS4 conducted an investigation in 2014 in which phone agents were videotaped while they encouraged an undercover producer and reporter to use fraudulent methods to obtain one of the free phones. There were several such incidents recorded, with the phone agents accepting someone else’s food stamp card to provide eligibility for a free phone, or saying that it was fine to use another person’s card.

One of the cell phone companies, Total Call Mobile, whose agents were videotaped in the investigation, has finally responded to the charges, saying in a letter to CBS4:

Total Call Mobile is outraged by the unacceptable actions shown in the broadcast. The broadcast depicted both agents and applicants seeking to improperly participate in the Lifeline program. They were both engaged in fraudulent activity… to enroll in the Lifeline program among other improper actions.

Total Call has pledged to deal with the issue, saying that they would provide evidence to authorities against the agents involved. The company also promised to implement new measures to prevent further abuse and fraud throughout their nationwide network, including the creation of a Total Call Mobile Fraud Tip Hotline.

But Total Call Mobile is just one of the companies involved in the nationwide Lifeline wireless program. And at a cost of more than $2 billion a year and with tens of millions of phones being given away yearly, it’s easy to imagine that the fraudulent misuse of the program is still occurring on a massive scale.

It’s unknown at this point how many of these free phones have been given away to unqualified citizens, but considering that the giveaway is very profitable for the participating telecom companies (not to mention how attractive free phones and service must be to a sizable portion of the public), it can be assumed that the number is probably very high indeed.

This is one of the huge problems with the type of federal giveaway programs which the Obama Administration has become famous for championing during its two terms in office. Not only is it questionable to begin with whether these programs actually help anyone in the long run, and may only hurt middle-class taxpayers while disincentivizing the recipients of the freebies, but these entitlement schemes are almost always subject to abuse and fraud.

We don’t need more wasteful government assistance programs — what we do need is a system that encourages people to take personal responsibility and one which does not place further burdens on the already beleaguered American middle class.

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