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Reports Of Fraud, Abuse Surround Federal Free Phone Program

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(credit: CBS) Liz Collin
At 15 years old, Liz Collin made her broadcast debut covering...
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MINNEAPOLIS (WCCO) — A federal program is giving away thousands of free cell phones and minutes in Minnesota, and you’re paying for it.

Helping low-income people connect to services they need, the program gives free phones with hundreds of free minutes each month to people in need to land jobs, make appointments and stay in touch with family.

But the program has come under fire for its $1 billion price tag and reports of fraud.

A company called Life Wireless teamed up with The Center for Changing Lives in Minneapolis to issue free phones to those who qualify, such as Michelle Adams.

Adams is looking for a job and signed up for a free phone.

“I’m really happy that they have this kind of service for people,” Adams said.

But it didn’t take long to find one man who admits he didn’t use the system the way it’s intended.

Odell Hilson sold his phone for $20 because he needed the money. He didn’t remember which company gave it to him, but he didn’t seem to care that taxpayers picked up the tab.

“They would be upset, because they figure they were paying for it and if that’s the case, then that’s not my problem,” Hilson said.

Look at your cell phone bill. There’s a line called the Universal Service Fund. It goes to pay for this Federal Communications Commission-sponsored program called Lifeline. It’s usually a couple dollars a month.

Lifeline began by paying for landlines for those in need. The rules called for customers to have an income 135 percent below poverty guidelines.

But in 2008, Lifeline added wireless providers and problems have been reported across the country ever since — people are getting dozens of free phones and not having the proof they need to be on the program at all.

Life Wireless is one of 104 companies in Minnesota approved to enroll customers in the program.

In all, those companies have distributed more than 55,000 phones at hundreds of events throughout the state.

Life Wireless says it has strict training for employees and they know what questions to ask.

“Nobody does more than Life Wireless to prevent waste, fraud, and abuse, and the best way to do that is to see the customer face-to-face in a live enrollment,” Jim Carpenter of Life Wireless said.

Still, Arkansas Congressman Tim Griffin doesn’t think the safeguards go far enough.

He believes most phones aren’t being used to help find jobs, and they’re costing the country far too much.  The republican has introduced a bill in Washington to get rid of the cell phones and only cover landline costs.

“The federal government doesn’t need to be providing people with cell phones,” Griffin said.

A spokesperson from the FCC said it has started to reform the program after getting complaints. By next year, it says there will be a national database to make it impossible for a household to get more than one free phone.

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