FCC Adopts Consent Decree Order Resolving Sprint Lifeline Violations

On November 4, 2020 the Enforcement Bureau (“the Bureau”) released an Order adopting a Consent Decree which resolves the Bureau’s investigation of Assurance Wireless (f/k/a Virgin Mobile USA), Sprint, and T-Mobile’s (collectively “the Company”) use of federal Lifeline support funds.  As discussed further below, the Company agreed to pay a $200,000,000 penalty and implement a compliance plan and other procedures to settle the investigation.


Background:  In January 2019, the Universal Service Administrative Company (“USAC”), the administrator of the Lifeline program, referred Sprint to the Bureau to investigate potential violations by Sprint of the Lifeline rules.  As you may recall, the Lifeline program prohibits eligible telecommunications carriers (“ETCs”) from seeking reimbursement for a subscriber unless the ETC has confirmed that the subscriber is eligible to receive Lifeline service.  USAC had identified potential discrepancies between the claims Sprint submitted to USAC under the Lifeline program and the determinative lists of Sprint customers in Texas provided by Texas’s Low-Income Discount Administrator, which is responsible for determining whether customers in Texas qualify for Lifeline support.  In addition, USAC noted that Sprint might have made duplicative Lifeline claims for customers in Florida and Michigan.  On USAC’s recommendation, the Bureau opened an investigation to look into Sprint’s actions in Texas, Florida, and Michigan.  In August 2019, that investigation was expanded to include potential non-usage issues that Sprint voluntarily disclosed after Sprint discovered a software programming issue that failed to detect over a million Lifeline subscribers who had lacked usage over an extended period of time.


Consent Decree: In order to resolve the investigation, the Company agreed to a Consent Decree, which requires the Company to implement a compliance plan and to pay a $200,000,000 settlement payment to the United States Treasury.  Pursuant to the terms in the Consent Decree, the Company is required to develop and implement the compliance plan within ninety (90) days of the effective date of the order, which must include operating procedures, a compliance manual, and a compliance training program.  Additionally, the Consent Decree further requires the Company to report any future incidences of noncompliance within thirty (30) days of discovery and to file regular compliance reports six months, one year, two years, and three years after the effective date of the order.  Finally, the $200,000,000 civil penalty must be paid within thirty days of the effective date of the order.


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