There’s No Such Thing as a Free Cell Phone

Published In Blog

May 6th, 2017

Most of us grew up believing the caution: “There’s no such thing as a free lunch.” In an updated twist, another truism has evolved: There’s no such thing as a free cell phone. Efforts have recently kicked off across the nation to stop a burgeoning horde of scammers set on trying to convince consumers that just such a thing exists and can serve them well.

The scammers particularly target older people, popping up and approaching them in person at bus stops and other gathering spots near senior centers and housing facilities — offering free cell phones and the promise of dependable, inexpensive service allegedly offered through the Lifeline Program.

The seniors who are ensnared are hurriedly handed a shiny, new-looking phone, and directed to sign a paper on the dotted line, often without the opportunity to read it first. The phone turns out to be a useless tangle of wires; the signature obligates them to comply with a contract they didn’t know existed. As repercussions, they’re typically left without phone service connecting them to the world, and sometimes dragged deep into debt.

When It’s Good, It’s Very Good

The Lifeline Program is legitimate and legal and a literal lifeline to many consumers, particularly seniors on fixed incomes. Established in 1985, it subsidizes phone service for many low-income Americans, assuring they can connect to jobs, family, and social and emergency services. The current monthly subsidy is $9.25 per household and each household is limited to one line — though residents living at the same address in senior housing complexes can each qualify for service upon providing proper documentation.

Lifeline was subsequently approved to offer cell phone in addition to landline services.

And in March of 2016, after a highly contentious vote by members of the Federal Communications Commission, the program was expanded to include broadband service for Internet access — a near necessity that 43 percent of the nation’s poorest households could not then afford.

This caused a dramatic increase in the number of people participating in the Lifeline Program. From then on — either appreciatively or condemningly, depending on personal politics — the entire Lifeline Program was popularly referred to as “Obama Phones.” There are currently more than 15 million Lifeline customers.

To participate in the Lifeline Program, individuals must either have income at or below 135% of the federal poverty threshold or participate in one of the following assistance programs:

The future of many of these programs, as well as the Lifeline Program itself, are uncertain under the Trump Administration, which has vowed to target them for cuts or elimination. To check current qualifications online, fill out a brief eligibility questionnaire.

Where It All Went Wrong

While the Lifeline Program itself is sound, many of the tactics currently used to enroll people in it are shady.

“What they really get is a ‘refurbished’ phone that looks new, but soon malfunctions — and they’re left with no recourse, no information or explanation,” says Jaime Aragon, who assists consumers in understanding and correcting erroneous utility bills at the Good Samaritan Family Resource Center in San Francisco. He says legitimate Lifeline dealers are legally required to provide a contract for services written in the purchaser’s primary language; but most often, no paperwork at all is provided.

There are other less obvious, but equally damaging violations that commonly accompany the too-good-to-be-true phone offers. They include:

The Either/Or Restriction. The Lifeline Program currently applies to either landline or cell service — not both — for each individual customer. But by accepting a “free” phone, consumers also unwittingly disrupt any service they have in place. In many cases, for example, once the free cell phone is in hand, customers’ landlines are disconnected, and their monthly bills for service often quadruple from $10 to $40 or worse.

Bills to Collections. Unfamiliar with the new phone services, many consumers ignore the new bills for it, assuming they’re simply more junk mail. In many of these cases, the ignored bills were sent to collections agencies known for their doggedness, jeopardizing the customers’ credit ratings and peace of mind.

Using It or Losing It. Consumer advocates point out that the “free” phones must be used at least once a month or they will be deactivated — and once a utility service is disconnected, it takes a great deal of time and effort to get it activated again. Consumers eager for a new phone are simply not told how usage affects the right to keep it in operation.

Buying Beyond Needs. Older people approached by the scammers are often unknowingly sold more than they need or use. They may contract to buy monthly Internet services, for example, when they do not want or even have access to a computer.

No Recourse. Consumer advocates who reviewed the contracts that were offered found they most often contained clauses requiring that any disputes about equipment or services must be decided by arbitration — effectively denying customers the option of suing the wrongdoers in court. This is the same restriction that recently came under fire, and was severely curtailed, when included in nursing home admissions contracts.

Fighting Back Against the Scammers

One reason the scammers have succeeded so far, according to Shawna Reeves, Director of Elder Abuse Prevention at the Institute on Aging, is that it takes a tremendous amount of time and resources to dig into the documents and the realities underlying the fraudulent transactions. Victims’ compensation programs that have successfully pursued and ended cases of senior abuse typically do not cover property crimes, so are of no service.

Another challenge: Utility companies that agree to be Lifeline providers get a set monthly amount for every consumer enrolled, directly invoicing the government. There is little oversight into the billing and paying processes.

“I’m also concerned because the carriers get a kickback, so they don’t want to pull out of the deals,” Reeves says. “That’s another thing that makes this situation hard to police.” Reeves and others say it’s paramount to urge seniors to report the phone scams they encounter, and to coach them to ask for all documents involved so that they can review them with others in a considered way before making important decisions about buying the goods and services offered.

To locate a legitimate Lifeline provider, go to Lifeline Support, or call the Universal Service Administrative Company at 888-641-8722.

Striving to stamp out fraud in its own front yard, the Federal Communications Commission (FCC) has also set up a specific arm to monitor abuses in the Lifeline Program. Those suspecting a scam are urged to contact the FCC online, and to provide as much detail as possible, including your name and contact information and the company allegedly supplying the Lifeline-supported phone service.

In addition, the FCC also operates a Lifeline Abuse Tip Line at 855-455-8477.

Finally, consumer advocates also caution that comprehensive investigations take time to conduct and complete. They urge that in addition to contacting the FCC, it is wise to get in touch with the local Adult Protective Services agency for help with potential Lifeline scams.

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