FCC cracks down on Obama Phone fraud, fines eleven companies $90 million

The Federal Communications Commission has taken another major step in its efforts to reduce fraud and abuse in the Obama Phone program by assessing $90 million in fines against eleven companies that participate in the program across the country.

According to a report by St Louis, Missouri’s KMOV News 4, the fines have even been assessed against two companies that previously told the station that the allegations were nothing to worry about.

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The FCC stated that Maryland-based Cintex Wireless intentionally targeted customers whose incomes were not low enough to qualify for Obama Phones. The company “earned” millions of dollars by enrolling these unqualified people.

When KMOV sent its news team to research the story, one Cintex representatives claimed to know nothing about the fines and another one was on vacation.

Despite the fact that Cintex’ legal team says they abide by the rules of the Obama Phone program, the FCC hit the company with a $9.5 million fine for allegedly violating the rules.

In an earlier report, the KMOV News 4 team learned that Life Wireless, a division of Telrite, was shipping Obama Phones to Missouri residents who said they had never enrolled in the program. After conducting a thorough audit of the company’s business, the FCC agreed and imposed a $22 million fine.

Global Connection, another Obama Phone competitor, was assessed a $12 million fine on the same day.

In addition to the $43.5 million in fines on Cintex, Life Wireless and Global Connection, the FCC has imposed fines of nearly $47 million against 8 additional Lifeline Assistance (Obama Phone) providers in the last three months. The companies have two options — either pay the fines or appeal them — and it has yet to be determined which choice the companies will make.

According to industry observers, there may be more than 2 million fraudulent Obama Phone accounts. The program has been plagued with fraud and abuse and the intent of the FCC audits are intended to clean up the troubled program.

Video source: KMOV