AT&T fined for gouging Uncle Sam on phone plans for poor folk

AT&T has been fined $10.9m by US regulator the FCC for overcharging the government on phone plans for poor people.

The watchdog said the telco over-billed the US government between 2012 and 2013 while providing the Lifeline service to hard-up citizens. Lifeline works like this: the cell networks offer discounted or free phone plans to people on low incomes, and then bill Uncle Sam to make up the difference.

According to the FCC, AT&T's Southern New England Telephone (SNET) subsidiary charged the government for providing Lifeline service to citizens who were, based on their income, ineligible for that coverage.

Exactly how much AT&T overcharged isn't known – but the cash has been paid back, we're told.

"American consumers trust that the companies who receive federal funds will use that money appropriately," said FCC enforcement bureau chief Travis LeBlanc. "We expect companies to be vigilant in protecting public funds and complying with FCC rules."

For its part, the former Ma Bell said the issue was just a big misunderstanding, and that it turned itself in to the feds after discovering the discrepancy.

"We discovered this issue in the course of an internal review, voluntarily reported it, and reimbursed the Universal Service Fund about a year ago," the telco told El Reg. "We also have implemented process enhancements so this does not happen again."

Under the terms of the FCC's settlement [PDF] with AT&T, the telco will cough up $6.9m, while SNET take a $4m hit. The companies will also be required to adopt FCC-written compliance plans that makes sure customers who don't qualify for the discounted plans can not do so.

AT&T will also have to provide training for its business partners to ensure they do not enroll people who do not legally qualify for the Lifeline plans. The settlement terms will remain in place for 36 months, with AT&T running the risk of further cash penalties if it enrolls people who should not qualify. ®