Senate probing alleged phone service subsidies scam

Written by  //  October 21, 2011  //  Telecommunications/Technology  //  No comments

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Sen. Lornna Soto will probe an alleged scam related to telephone subsidies that TRB President Sandra Torres (background) uncovered. (Credit: © Mauricio Pascual)

Upon learning earlier this week that more than 200,000 local consumers are allegedly committing fraud with subsidies offered on residential and wireless telephone services, Sen. Lornna Soto will visit the Telecommunications Regulatory Board today to collect documents and other information that may be referred to local and federal law enforcement authorities for further scrutiny.

The information surfaced earlier this week, when the Banking, Consumer Affairs and Public Corporations Committee she chairs held a public hearing to analyze Senate Bill 2139 that seeks to transfer legal authority to the TRB to oversee the Universal Service Fund that benefits eligible low-income island residents.

Since 2000, Solix, a third party company, has handled that task, according to information posted on its website. It has processed about $7 million a year, which would put the total collected from local telecom service providers at $77 million.

During the hearing, TRB President Sandra Torres revealed that an agency audit has detected that more than 200,000 people have incurred in fraud related to the subsidies provided under the so-called Lifeline program, and that Solix has ignored the situation.

“The only guarantee the Board has to ensure that in due course, upon completion of audit being performed, [companies] can get back the money retained from them,” she said, noting that as a precaution, the TRB took over the task of collecting the USF money from carriers.

She further explained that 21 percent of the fraud cases affect Puerto Rico Telephone, which does business as Claro. Under the Lifeline program, qualified telephone subscribers can receive discounts on basic monthly service for residential and wireless services.

“This scam [has been taking place] from September 2010 to June 2011. We have not been able to go back or move forward because there is a case by the companies against the JRT at the Appellate Court, which has stopped our process,” she said. “Those companies want retentions to stop and to get back the money that was retained.”

Upon taking over her post in November 2009, Torres said she noticed a spike in the number of USF users that reached a number that exceeded Puerto Rico’s poverty index. This raised a flag that set off an investigation into Solix, which failed to warn about the problem.

The probe soon uncovered the number of consumers who were scamming the benefit program, she said.

“The Board does want to defend those who truly qualify to benefit from the USF, because it’s not fair that while there are people in need, a single person is taking advantage three or four times over,” she said, adding there are beneficiaries on the program with stateside addresses and others with “duplicate, triplicate and quadruplicate Social Security numbers.”

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