U.S. aid program to keep people online was riddled with deception, fraud

A pandemic-era initiative has helped millions of low-income families stay connected. But it has suffered persistent abuses, a Post investigation found, as telecom giants have introduced price hikes, speed cuts and fraud risks.

Illustration by Anson Chan for The Washington Post
23 min

The complaints began pouring into Washington this summer, the criticism directed at Assurance Wireless, a little-known company owned by the telecom giant T-Mobile.

In Sun Valley, Calif., a local resident in June claimed that Assurance Wireless sent an agent to their mother’s door — and pushed her to sign up for mobile internet funded by the federal government even though she didn’t need it.

Another in Phoenixville, Pa., alleged a month later that they received a “deceptive” offer in a text message — which ultimately resulted in federal aid being sent to Assurance Wireless for service that the customer said they didn’t seek.

And time and again, a social worker in South Boston claimed Assurance Wireless and other providers had enrolled seniors in the government program under dubious terms. Sounding off to the Federal Communications Commission, the nation’s chief telecom regulator, the unnamed writer coupled their criticism with a plea for help: “This is not an isolated incident for me.”

The Covid Money Trail

It was the largest burst of emergency spending in U.S. history: Two years, six laws and more than $5 trillion intended to break the deadly grip of the coronavirus pandemic. The money spared the U.S. economy from ruin and put vaccines into millions of arms, but it also invited unprecedented levels of fraud, abuse and opportunism.

In a yearlong investigation, The Washington Post is following the covid money trail to figure out what happened to all that cash.

Read more

At the height of the coronavirus pandemic, Congress chartered a first-of-its-kind federal effort to help struggling Americans who could not afford to lose access to the internet. The generous aid proved to be a godsend for millions of low-income families, but it also sent the nation’s telecom giants scrambling for the new federal money — unleashing price hikes, service cuts and fraud risks that hurt customers and taxpayers alike.

The story of the government’s roughly $17 billion effort to close the country’s persistent digital divide is one of great promise and costly peril. Under the program, Washington offered to pay stipends directly to internet providers that lowered Americans’ monthly broadband bills — potentially to zero. But this simple premise at times brought complicated, undesirable results.

In the earliest days of the program, telecom giants including AT&T, Charter Communications and Verizon forced customers to accept price increases or slower connection speeds if they wanted to apply federally funded discounts to their bills, according to complaints filed with the FCC and later obtained by The Washington Post under federal open-records laws.

The companies’ practices — on top of the government’s flawed application system — also left the program at risk of fraud, according to the FCC’s internal watchdog. Last year, for example, a wide array of internet providers including Dish Network, the owner of Boost Mobile, administered aid for roughly 200,000 people who claimed to have children attending schools in high-poverty areas. But tens of thousands of these beneficiaries listed schools on their applications that were thousands of miles away from their home addresses, The Post found, while others named no child at all. A subsequent crackdown ultimately saw the government cancel benefits for nearly all these school-based subscribers, including those with likely legitimate claims.

The Biden administration worked with Congress to improve the program beginning in November 2021, but new trouble soon emerged: Assurance Wireless along with other, lesser-known internet providers started showing up at Americans’ doors unannounced, pushing subpar service on unsuspecting families and potentially signing up others without their knowledge or permission. Others who received aid through another low-cost T-Mobile brand, Metro by T-Mobile, reported additional incidents — including months-long delays that left them on the hook for bills they could not afford.

Tara Darrow, a spokeswoman for T-Mobile and its other brands, Assurance Wireless and Metro, said they took “took extraordinary measures, closely following FCC guidelines and using recommended systems” to stand up benefits in record time. She said delays are uncommon, while there is “no instance where a customer could be enrolled in these programs without their permission.”

To date, more than 14 million households have enrolled in the federal broadband benefit system, the government reports. But the figure represents about a quarter of the estimated 49 million American households that are eligible for help, according to a Washington Post analysis. Telecom experts attribute at least some of the gap to the multibillion-dollar industry that administers the aid.

“What you’re seeing is not an issue with the [federal] program, it’s an issue with the broadband economy ecosystem overall,” said Brandon Forester, a national organizer at MediaJustice, an activist group that promotes online access particularly for marginalized groups.

“Their interest is not in serving community members,” Forester said of the internet providers. “Their legal requirement is to return profits to shareholders and investors.”

This story is based on interviews with nearly three dozen government officials, public-interest advocates, nonprofit leaders and internet subscribers, most of whom spoke on the condition of anonymity to reveal private deliberations. The Post also obtained data under the Freedom of Information Act about nearly 200,000 subscribers, along with thousands of consumer complaints, including those concerning Assurance Wireless and other firms.

In written responses, spokespeople for AT&T, Charter, Comcast, Dish and Verizon each called the broadband benefits essential in keeping Americans online. They said they had been diligent stewards of federal money and noted many of the discrepancies stemmed from the government’s own actions.

Paloma Perez, a spokeswoman for the FCC, said that “investigations” are underway — and that the commission is aggressively keeping watch over federal aid. On Capitol Hill, lawmakers pledged to press the telecom industry over its tactics as well.

“Congress put strong consumer protections into the laws to prevent these types of egregious actions from occurring in the first place, and these companies have a lot to answer for,” said Rep. Frank Pallone Jr. (D-N.J.), the leader of the telecom-focused House Energy and Commerce Committee. “I intend to hold them accountable.”

‘Bait and switch’

For Cristina Pastrana, the prospect of cheap broadband last year came as a welcome surprise. The 43-year-old in Brooklyn had just subscribed to Verizon fiber internet that August, and she soon looked to apply a government discount toward her roughly $90 monthly bill.

Called the Emergency Broadband Benefit, the aid program offered Americans up to $50 each month toward internet services if they received certain other government aid, including health benefits under Medicaid or food stamps, or if they were unemployed. Congress approved the initiative in December 2020, adding it to the roughly $5 trillion in federal relief funds that helped rescue the economy even while it unleashed a wide array of waste, fraud and abuse, as The Post has found in its year-long investigation, the Covid Money Trail.

But Pastrana quickly discovered the help came with a catch. In a recent interview, she said Verizon called her after she enrolled in the federal program with an ultimatum: She could keep the subsidy only if she agreed to switch to a different plan with lower speeds. Out of work and facing financial hardship, Pastrana fought to keep her service and prevailed, though she later described the situation as a “bait and switch.”

“People are working from home, they have their kids at home, they can’t afford this — and you’re literally threatening to remove the service or support,” she said.

Many customers — with Verizon and other carriers — complained to the FCC about similar threats and demands. Their frustrations reflected the program’s signature challenge in its early days, as telecom giants accepted government subsidies only on the condition that customers accepted price hikes or service cuts.

“There’s a lot of mistrust [that] there’s going to be a catch,” said Evan Marwell, the executive director of EducationSuperHighway, a nonprofit that has advocated for the program and helped people enroll.

In creating the federal broadband benefits, Congress faced an urgent task. Roughly one-quarter of Americans do not subscribe to high-speed home internet, according to the Pew Research Center, a digital divide made worse by a pandemic that forced people to work, learn and communicate online. Lawmakers could have put in place tough, strict rules, requiring telecom providers to maintain a minimum level of service in exchange for federal payments. But Democrats and Republicans faced an onslaught of industry lobbying, so they instead chose to apply a light touch in the waning days of the Trump administration — and made companies’ participation in the program voluntary.

Telecom giants soon subjected their customers to a patchwork of inconsistent speeds and price points. AT&T, for example, told some subscribers with premium service — ultrafast fiber connections with download speeds up to one gigabit per second — that they could receive the subsidy only if they changed to service that was one-third as fast with possible monthly data caps, according to complaints filed with the FCC.

“Internet service providers should not be allowed to ruin this program,” a frustrated AT&T subscriber from Orange, Calif., told the agency in June 2021. The comment, one of thousands obtained from the FCC under the Freedom of Information Act, redacted filers’ names and other details.

Some subscribers with Charter and its internet offering, Spectrum, were stunned to read the company’s fine print last year. To receive federally funded discounts, customers had to opt into higher-priced service once the government aid, totaling $3.2 billion, ran out — threatening them with potential price spikes in the future.

More recently, Charter has paired federal broadband benefits with its own promotional discounts. The move has opened the door for sizable price increases on low-income Americans once the company’s time-limited assistance expires.

“I am trying to get help to lower my bill temporarily because of the hardship COVID has caused and why would I increase my price plan to get a discount and then end up paying the same or more,” a customer from Fairfield, Maine, told the FCC last May.

Asked about the complaints, AT&T spokesman Jim Greer said the rush in Washington “presented unique technical challenges,” so the company could only apply the benefit to select plans at first because of its computer systems. Cameron Blanchard, a spokeswoman for Charter, said the company had been clear with its customers — securing “significant participation” in the program while helping “millions of families gain access” to affordable internet.

Only after a public outcry did Verizon reverse course last May. Rich Young, a spokesman, acknowledged in a statement that “some customers experienced administrative issues during the program’s initial rollout.” But he added that “most if not all of those problems have been rectified.”

An ‘entry point for fraud’

It did not seem particularly unusual when 75 families in and around Jamaica, Queens, each signed up for federally funded internet last fall. Like many cash-starved Americans, the residents of this New York City neighborhood were eager to lower their broadband bills — and they soon put their up-to-$50 government discounts toward service offered by Boost Mobile, the low-cost provider owned by Dish Network.

But the help proved short-lived. Not even three months after enrolling, nearly all of the families had been removed from the government program. Each had claimed on their application to have a child attending a high-poverty school, and each had said that school was roughly 4,000 miles away — in Anchorage and other parts of Alaska — raising the suspicions of federal watchdogs.

The details are laid bare in a trove of new data obtained by The Post under the Freedom of Information Act. The records illustrate how mishaps and missteps at the start of the broadband program — from aggressive telecom sales agents to faulty government technologies — may have put taxpayer dollars and innocent Americans at risk.

In setting up the benefits, the government sought to ease the burden on low-income families, particularly those with students studying at schools in high-poverty areas. To qualify, parents had to indicate the school they attended on the federal application.

Nearly 200,000 people ultimately obtained subsidies this way by the end of 2021, according to the data obtained by The Post. But a significant portion managed to enroll despite submitting incomplete or irregular applications, the records show.

More than 143,000 of those beneficiaries signed up for monthly stipends on behalf of a student whose name they never supplied, the records show. Nearly 20,000 applicants — some including children’s names, some not — also named a school 50 miles or more away from their home address, a distance that federal investigators would later identify as suspicious.

An AT&T subscriber in Clifton, N.J., for example, qualified for a federally funded discount by claiming last October they had a child who was receiving free or reduced-price lunch — at a school in Nampa, Idaho, more than 2,300 miles away. That same month, in Philadelphia, a customer of a smaller provider, Excess Telecom, obtained federal benefits on behalf of a student about 2,300 miles away in San Diego.

But the most frequent issues involved Dish and its low-cost brand, Boost Mobile, which received federal money on behalf of more than 11,000 applicants who claimed to have students attending far-flung schools. That included more than 400 students who were 1,000 miles away or more.

In many cases, employees at Boost Mobile stores — and agents at other internet providers — helped people obtain the discounts. Across the industry, company workers assisted at least 73,000 school-related subscribers in enrolling for federal benefits, the data show, meaning telecom giants may have played some role in overseeing the submission of problematic applications.

Ted Wietecha, a spokesman for Dish, said Boost Mobile services are offered through “independent third-party retail outlets.” He added that the company has “worked to be a reliable partner” with the FCC, and its efforts had resulted in “multiple process improvements” in the benefit program.

Jo Maney, a spokeswoman for Excess Wireless, said the company is “working diligently with government officials and other stakeholders to root out improper activities.” Greer, a spokesman for AT&T, said the problem stemmed from the federal government’s application system, since the wireless giant “relied” on that technology “to determine whether a household is eligible.”

The suspected fraud underscored a conundrum for the Biden administration as it sought to thwart criminals while helping low-income Americans access aid. Too many regulatory restrictions would have deterred families from signing up, while too few threatened to invite abuse.

The same dynamic long plagued a precursor program, known as Lifeline, which launched under President Ronald Reagan to reduce needy Americans’ home phone bills. As that program expanded, the FCC increasingly issued fines, particularly in cases where agents signed up people who didn’t qualify — and still collected commissions.

But some of the FCC’s recent attempts under President Donald Trump to fight Lifeline fraud instead left the program in disrepair. The Trump-era FCC, overseen at the time by Chairman Ajit Pai, never finished what was supposed to be a national online application for Lifeline benefits. By the time Pai left office, the system remained incomplete; it hadn’t been integrated with many state and federal benefit systems. The deficiencies made it hard and slow to use, and sometimes, inaccurate in rendering decisions on who should qualify for help.

The U.S. government still turned to the same beleaguered system, known as the National Verifier, to administer the new broadband program anyway. It soon brought predictably troubling results, as millions of Americans reported hours-long delays and technical glitches. And the system failed to catch obvious signs of fraud, including families that lived implausibly far from schools where they claimed to have students. Even into this year, the verifier missed thousands of instances where new subscribers enrolled in the benefit system all using the name of the same 4-year-old.

The threat of theft first grabbed the attention of the FCC’s inspector general last November. The watchdog warned that high-poverty schools had become an “entry point for fraud.” And it rebuked telecom giants — without naming any — for paying commissions to agents that might have incentivized problematic enrollments. The inspector general said the “abuses” resembled those that “once plagued the FCC’s Lifeline program.”

In response, the FCC immediately tightened eligibility, then required the roughly 200,000 school-related beneficiaries to submit to another review. Yet few enrollees completed the process: About 9,500 people, or less than 5 percent, requalified last year, according to data obtained by The Post. FCC aides believe the low response rate reflects the reality that low-income families are hard to reach, meaning thousands of innocent Americans may have lost benefits amid the crackdown.

“What we don’t want to see is consumers be prevented from ever enrolling in a program again when it was the provider that was being misleading,” said Jenna Leventoff, a senior policy counsel for Public Knowledge, a public-interest group.

The FCC’s inspector general, however, said in a May 2022 report that it was “confident” it had “saved the program millions of dollars each month in wasteful disbursements.”

‘Deceptive enrollment practices’

The man set up shop at an unmarked gray table, the stacks of WiFi-enabled tablets in blue boxes piled high. It had become a common scene in Waukegan, Ill., an industrial suburb about 40 miles outside of Chicago — and Anne Durot was not pleased.

A volunteer with ConnectWaukegan, a local nonprofit, Durot and her peers had spent months trying to help low-income residents obtain quality internet — high-speed connections, funded by federal benefits, that might satisfy families’ needs. At times, though, the aid workers found themselves struggling to break through a wide array of telecom providers that seemingly hoped to make a buck.

So on a sunny day in September, Durot and her colleagues strolled over to the table not far from Harry Poe Manor, a low-income housing community. They confronted the man, whose tablets had stickers identifying the company providing them as Maxsip, an obscure telecom firm. Online, the company promised prospective customers they could obtain “free mobile internet service,” along with a free tablet or other device with 4G speeds, less than the state-of-the-art 5G service millions of Americans receive through major providers.

“They’re sitting here in a public park taking advantage of residents who want free phones,” she said.

Israel Max, the chief executive of the company, said they are focused on helping “the people who need it” and noted he would investigate the matter. But the situation in Waukegan still highlighted a broader challenge facing the federal government, as it labors to keep close watch over an aid program that has become a business opportunity.

The latest trouble surfaced this year, months after regulators at the FCC and lawmakers on Capitol Hill set their sights on recalibrating the federal internet subsidy. In November, President Biden signed into law a sprawling $1.2 trillion infrastructure package that replaced the Emergency Broadband Benefit with a new $14 billion initiative, called the Affordable Connectivity Program. Democrats and Republicans maintained the spirit of the original discount — though Congress cut it to $30 per month from $50 — and they added new rules to clamp down on some of the worst abuses.

“In creating the Affordable Connectivity Program, the Administration worked with Democrats and Republicans in Congress to strengthen consumer protections and crack down on bad conduct by internet service providers,” said Robyn Patterson, a spokeswoman for the White House.

The revisions provided a sustained reprieve in places like Jefferson County, Wash., near Olympic National Park, where internet options are limited and bills can be “substantial,” said Jamie Pena, who oversees digital equity at the local library.

“I think it’s helping people get connected since the pandemic, even though we’ve reopened to some extent,” he said.

But the tweaks also opened the door for new challenges, particularly involving low-cost carriers that saw the revised federal program as a fresh source of new customers. Some firms dispatched a raft of sales agents in Allentown, Pa., Austin, Cleveland and other cities, troubling local officials, who said they saw suspicious marketing tactics on display.

Outside Chicago, Max said his company, Maxsip, sought to provide the best tablets and service it could given the meager size of the federal benefit paid to providers. “Our goal is to find solutions that can help people use the program,” he said.

But Max added the operation relies on a network of marketing firms, which hire their own agents to set up tents and help sign up low-income Americans. They are supposed to register with the government, identify themselves clearly and provide reliable information, but the chief executive acknowledged not everyone in the industry follows the rules.

“I’m shocked to hear it, but I’m not at the same time,” he said, pledging he would look into the matter.

The problem has been especially evident in the case of companies that participate in the Lifeline program. For these firms, which are supposed to serve the neediest Americans, the new broadband subsidy has proved lucrative: They could continue offering cheap, government-subsidized telephone service — and then tack on federal payments covering high-speed internet.

In other words, Lifeline providers can collect from Washington more than $40 every month for each customer they enroll in both programs. That could come at the detriment of low-income families, however, who may be better served if they put their benefits not toward a single mobile phone but rather home internet that provides access for an entire family.

“They’re not breaking any rules, but people don’t have all the information,” said Angela Siefer, the executive director of the National Digital Inclusion Alliance, a network of organizations that aim to close the digital divide.

In person, and through texts and online advertisements, companies including Assurance Wireless allegedly pitched new and existing customers on the premise of free, unlimited phone data — a massive upgrade from the meager plans they previously had received under the government’s Lifeline program. Atop its website, in smaller font, the company informs people that the service is covered under the Affordable Connectivity Program.

Some customers did not appear to notice the disclosure at all, and later complained about the T-Mobile-owned provider to the FCC. The marketing tactics also sparked more than just confusion: Some low-income subscribers told the FCC that they had already put their monthly broadband discounts to use on another provider. Once they were signed up with Assurance Wireless, their benefits were transferred — and suddenly they were on the hook for another bill that previously had been free.

Darrow, the T-Mobile spokeswoman, said customers could not have been enrolled against their will in part because the company “requires that they go through a series of steps and certifications in the application process.”

Even those who obtained the service they wanted soon experienced complications. Metro, another T-Mobile subsidiary, took months before it applied federal benefits to some customers’ accounts. In Gainesville, Ga., Wilmington, Del., Knoxville, Tenn., South Richmond Hill, N.Y., Ochelata, Okla., Lake Mary, Fla., and elsewhere, residents repeatedly said that Metro left their bills at full price for multiple billing periods — cutting into their already cash-strapped bank accounts.

“I am very poor and can’t afford to pay them every month,” a resident of Medford, Ore., told the FCC this August, two months after applying for federal aid that never arrived.

In response, Darrow said T-Mobile is not aware of any large-scale benefit delays. But she said delays are possible in the event of application lapses, like discrepancies in names and addresses, as the company looks to protect the program against fraud.

Across the telecom industry, the incidents prompted the FCC’s inspector general this March to warn Lifeline providers against engaging in “deceptive enrollment practices.” The agency said it had heard reports that “several” companies were “misleading Lifeline consumers into enrolling for undesired service” through the broadband benefit program.

In one example, the watchdog highlighted an unnamed firm that had “forced” consumers to obtain or transfer their monthly internet subsidies away from their existing provider to enroll in Lifeline. The firm referenced in the report was Q Link Wireless, according to documents The Post later obtained under FOIA from the inspector general.

John Nakahata, a lawyer for Q Link, described the issue in a statement as a “web script error.” He added that “no consumer was enrolled in ACP as a result,” as consent was collected later in the application process. Nakahata said the inspector general had not contacted the company before publishing its report in March.

Perez, the spokeswoman for the FCC, said the agency’s enforcement bureau as a general rule “follows up with consumer complaints related to ACP providers, including Q Link, to address whatever issue a consumer faces.”

“The Enforcement Bureau has been in touch with the OIG, and is conducting its own investigations and assessing whether there were any rule violations,” she said.

In the face of these and other mounting concerns, the White House has sought to make it easier for low-income Americans to find and choose quality broadband plans. In May, Biden announced a partnership with 20 of the country’s largest providers to improve their low-cost offerings. Between the announcement and October, more than 2.5 million people enrolled in the federal benefit program, according to administration officials.

Vice President Harris, meanwhile, personally hit the road, touting the benefits of internet access — and the importance of affordable connectivity that some Americans still have not been able to obtain.

“We created this program because we know when we connect folks with high-speed internet,” she said, “it is also a connection to opportunity — the opportunity to live a healthier, happier, and more prosperous life and, importantly, more affordable lives.”