By Chris Donkin

US MVNO Tracfone Wireless made a US$13.4 million settlement to resolve a Federal Communications Commission (FCC) case involving it signing up more than 175,000 ineligible customers to a low-income connectivity scheme.

In a statement, the FCC noted the deal settles a case surrounding Tracfone’s compliance with the Lifeline scheme, which provides discounted mobile services to consumers on low incomes. It is part of the wider Universal Service Fund (USF).

Of the US$13.4 million, almost US$11 million will go into the USF with the remainder being paid as damages to the government.

The case followed an investigation by the FCC, which concluded Tracfone did not have adequate internal controls and compliance measures for the scheme in place over an “extended period of time”.

Alongside the payment, Tracfone is obliged to modify its business practices to ensure its accordance with Lifeline rules going forward, designate a compliance officer, create an oversight team comprised of senior executives and conduct dedicated staff training.

Highlighting the organisation’s ongoing efforts to “root out waste, fraud and abuse” of such schemes, FCC chair Jessica Rosenworcel (pictured) said the action should “serve as a warning to others that we will do everything we can to ensure strict compliance with the rules of the road”.

Verizon closed an acquisition of Tracfone in 2021, but the FCC’s claims date to the period between 2012 and 2015 when the MVNO was owned by America Movil.