UPDATE: Government phone give-away - Action News 5 - Memphis, Tennessee

UPDATE: The Investigators: Government phone give-away

Posted: Updated:
Free cell phones for Americans on government assistance. A train wreck waiting to happen right? Andy Wise says you don't know the half of it. Free cell phones for Americans on government assistance. A train wreck waiting to happen right? Andy Wise says you don't know the half of it.
MEMPHIS, TN -

CONSUMER ACTION:  If you received one of these phones -- and did not apply nor qualify for it -- and are having trouble sending them back to Assurance Wireless, the U.S. Postal Inspection Service recommends you send them back marked "return to sender" IF the box is NOT opened.

If you have opened the box, inspectors recommend you recycle the phone at kiosks provided by ECO-CELL (www.eco-cell.org) at both the Memphis Zoo (www.memphiszoo.org) and the YMCA of Greater Memphis (www.ymcamemphis.org).

(WMC TV) - A cellular phone company that mistakenly shipped an untold number of free cell phones in a government welfare program is insisting consumers either return them at their own expense, keep them or destroy them.

"(A customer service agent) said, 'Yes, you're welcome to return it, but it will be at your cost, not ours,'" said Nancy Steichen of Berclair/East Memphis.

Steichen's mother received the phone as part of the Lifeline Assistance program, a 25-year-old federal program to provide free or discounted phone service to Americans on public assistance.

Except Steichen's mother isn't enrolled in the program.

Neither are more than a dozen viewers who contacted Action News 5 after receiving the phones from Virgin Mobile/Assurance Wireless.

Aug. 8, the Action News 5 Investigators reported a rogue agent representing a community outreach partner of Virgin Mobile/Assurance Wireless faked applications for the program, according to a company spokesperson.

As a result, Virgin Mobile/Assurance Wireless shipped an untold number of Tennesseans and Mississippians free, unsolicited cell phones.

Jack Pflanz, corporate communications manager for the cellular company, confirmed that an unnamed agent with a Tennessee outreach group "...was fraudulently filling out applications" with the names of Tennesseans and Mississippians, pulled from public records. The agent was apparently padding his submissions of "certified" applicants.

"We were able to stop some of the phones from shipping, but a few got through," said Pflanz, who could not say how many phones were improperly shipped.

"The agent who engaged in the misconduct was immediately terminated by the community outreach organization, and that organization has taken responsibility for the incident," he added, without releasing the name or location of the community outreach organization.

For our first report, Pflanz provided what he described as a dedicated phone line for citizens who mistakenly received the phones to return them.

The number is the same customer service number published in the phone's owner's manual. More than a half-dozen citizens have reported 15 to 30-minute wait times, only to be told they can't return the phones without paying for the shipping.

It led Midtown's Ralph Williams, who received one of the unsolicited phones, to believe Virgin Mobile/Assurance Wireless has already collected its federal subsidies for the phones, despite their fraudulent delivery.

"I think that Assurance Wireless has somebody who is just filling in applications because they get paid for providing this service," said Williams.

The Action News 5 Investigators attempted to return one of the phones. It was erroneously shipped to an East Memphis auto body shop.

The customer service agent gave us the same options:  ship it back at our own cost, throw it away or activate the phone.

The program is funded by the Universal Service Fee that appears on most Americans' phone bills. The Universal Service Administrative Company (www.usac.org), a not-for-profit designated by the Federal Communications Commission (FCC) to manage the fund, collects the fee and pays subsidies to telecommunications companies participating in Lifeline Assistance, according to Eric Iversen, USAC's director of external relations.

Iversen said the Reagan administration created the program in 1986 to provide Americans on public assistance -- those receiving Medicaid, welfare checks (now TANF payments), food stamps and supplemental Social Security -- free or discounted phone service.

Iversen said in 2008, the Bush administration expanded the program to include telecommunications companies that did not own the networks over which they transmit data, including cellular service providers.

"There is no contract," Iversen said. "This is a program that is based on companies filing data with us, and the data consists of, more or less, the number of (phones) attached to eligible consumers for which Assurance Wireless has charged less than the average consumers.

"Assurance Wireless is supposed to get certifications from customers that, yes, I am eligible to receive this service, and it's supposed to verify the eligibility of those people...then we provide a unit subsidy per customer:  $30 per person to help the company start the service, then $10 per month per certified customer."

Pflanz insisted the company would not receive any federal subsidy for any of the phones erroneously shipped because of the fraud, despite his customer service agents recommending citizens go ahead and activate the phones.

"Virgin Mobile/Assurance Wireless does not, and will not, receive any compensation for those folks from the Universal Service Fund," he said.

However, this incident revealed a loophole in the program's certification process.

Both Pflanz and Iversen confirmed that under the federal guidelines, some applicants for the government-subsidized cell phones don't have to provide documentation proving their participation in Medicaid, TANF, food stamps, Social Security supplemental income or other requirements.

Instead, they sign a sworn affidavit, under penalty of perjury, that they receive some sort of public assistance.

"There are circumstances where customers are able to 'self-certify' their eligibility," admitted Pflanz.

"It is a self-certifying program," agreed Iversen. "It is Assurance Wireless's responsibility to verify the accuracy of these customers' eligibility.

"USAC also conducts audits where we look at the rolls of subscribers to determine the accuracy of their eligibility, and we also use outside auditors to support the program."

Iversen would not reveal how often USAC conducts those audits.

"We don't need to be doing this at all.  It needs to be eliminated," said U.S. Rep. Alan Nunnelee, (R) Mississippi's First District. "Like a lot of government programs, it starts out well and gets out of hand very quickly.

"You can go down to almost any convenience store right now and get a cell phone for $9.95 a month that will serve emergency purposes. (The free cell phone program) ought to be eliminated as quickly as we can get to it."

Nunnelee said he will seek congressional authority to eliminate the cell phone component of the Lifeline Assistance program.

"Our government's dealing with a debt crisis right now," said Bob Adams of Olive Branch, MS, a small business owner who received one of the phones. "It's the biggest news that you see, and we're struggling with a huge entitlement burden, and now we got our free government cell phones. So I was furious."

Copyright 2011 WMC-TV. All rights reserved.

  • Most Popular StoriesMost Popular StoriesMore>>

  • Teen killed in crash after prom

    Teen killed in crash after prom

    Friday, April 18 2014 10:46 PM EDT2014-04-19 02:46:47 GMT
    (WMC-TV) - A young man's life was taken too soon. It was supposed to be a high school memory of a lifetime for Andrew Archer, but prom night turned into a tragic night for his family and friends. His promMore >>
    It was supposed to be a high school memory of a lifetime for Andrew Archer, but prom night turned into a tragic night for his family and friends.More >>
  • Woman featured on News Channel 11's Most Wanted list captured

    Woman featured on News Channel 11's Most Wanted list captured

    Tuesday, March 4 2014 12:51 PM EST2014-03-04 17:51:53 GMT
    Rebecca SpearsRebecca Spears
    A woman wanted for a failure to appear in court charge, was captured Monday.Rebecca Spears was listed as wanted by authorities for failing to appear in court on charges of driving on a suspended license and not having insurance.More >>
    A woman wanted for a failure to appear in court charge, was captured Monday.Rebecca Spears was listed as wanted by authorities for failing to appear in court on charges of driving on a suspended license and not having insurance.More >>
  • 7-year-old girl writes book after mother's death

    7-year-old girl writes book after mother's death

    Friday, April 18 2014 8:31 AM EDT2014-04-18 12:31:56 GMT
    (WMC-TV) - Most 7-year-old girls are playing dress up and reading books, but one Mid-South girl is the exception—not just reading but writing books. Shiloh Sanders talked about the inspiration behind herMore >>
    Most 7-year-old girls are playing dress up and reading books, but one Mid-South girl is the exception—not just reading but writing books.More >>
Powered by WorldNow