Redundant Headline: Free Phone Program Full of Fraud, Abuse

The government’s free phone program is corrupt, by definition.


I know this will shock you. According to a local CBS Denver station, “Government’s Free Phone Program Riddled With Abuse, Fraud.”

The $2 billion a year Lifeline program has handed out more than 13 million free cellphone plans across the country in the first six months of this year. In Colorado, the program handed out more than 117,000 free cellphone plans in the first half of this year, or about 20,000 cellphones every month.

The free phones and their wireless plans are paid for by a monthly tax on your cellphone, called the Universal Service Tax. Although the Lifeline wireless program has been around since 2005 and started under president George W. Bush, it has exploded under President Obama’s administration and the phones are often referred to as “Obamaphones.”

The program has strict guidelines. To qualify, you have to be on food stamps, Medicaid, housing assistance or some other government program to prove that you are low-income. The idea is that people who could not otherwise afford mobile phones would have them to help look for jobs, call 911 in an emergency or stay in touch with family members.

But on multiple trips to Colfax Avenue and Broadway in Denver, where multiple distributors set up their tents to hand out free cellphones, a CBS4 producer and reporter found the phone agents willing to circumvent strict government rules designed to ensure that only the truly needy get the free phones. The vendors receive massive government subsidies to hand out the phones and the accompanying monthly plans.

“Want to sign up for a free phone?” an agent representing Total Call mobile asked a CBS4 producer. The representative then asked if the undercover producer had a food stamp card, a Medicaid card or any other evidence that he qualified for a phone.

“No,” replied the CBS4 employee. But one of the cellphone agents then ordered his colleague to “push it through,” by using someone else’s food stamp card to provide eligibility for the CBS4 employee.

[See also, “I Sold My Soul for an Obama Cell Phone and a Colonoscopy”]

They found that this sort of fraud goes on all the time. In several cases, like the one mentioned above, the provider assisted in the fraud because he received a fee from the government for every phone he gave away. In other cases, it was the recipient who performed the fraud, perhaps without the provider’s knowledge.

Over and over, men and women who obtained the free phones told CBS4 they were already paying for iPhones or smartphones but couldn’t resist getting a free phone, courtesy of taxpayers.

So these people might qualify based on income, but they were able to afford a better phone.

That raises the question: Is it even possible, that someone really can’t afford any kind of phone if he or she wants one? Is this really about not having enough money in an absolute sense, or is it that they don’t want the phone enough to sacrifice other purchases they wish to make?

Ironically, when the government subsidizes a consumer good it keeps the price of that good from falling. Why should mobile phone makers get a government subsidy? Without that subsidy they would have more incentive to make cheaper phones to try to get more customers.

Nothing about the Bush-Obama-phone makes any sense.