Conservative activist, James O’Keefe, gathered undercover footage of two corporate distributors handing out free cell phones to low-income citizens who pledge to sell the phones for drug money, to pay bills and to make extra spending cash.
Dubbed the “Obama phone” the free cell phones are part of the Federal Communications Commission’s “Lifeline” program, which was started in 1984. Paid for by the FCC’s Universal Service Fund, the program is “a government benefit program that provides discounts on monthly telephone service for eligible low-income consumers to help ensure they have the opportunities and security that telephone service affords, including being able to connect to jobs, family and 911 services.”
Rules of the program say there can only be one phone per household and that the phone cannot be sold after it is given to the recipient.
The Daily Mail reported an exclusive with O’Keefe’s investigative group, Project Veritas, which hopes to uncover corruption, waste and misconduct.
Project Veritas hired an actor to go into a StandUp Wireless store in Philadelphia and ask if he can sell the phone once it is given to him.
The worker responded: “Whatever you want to do with it.”
“Okay, so I can get some money for heroin,” the actor said.
“Hey, I don’t judge,” the worker said.
In another video, a female actor asks if she should write down on her application that she intends to sell the phone.
“Probably, like, plead the Fifth on it,” a worker told her and admitted, “it’s illegal.”
Another worker tells the undercover Veritas actor to take the phone to a pawn shop if she wants to know what it is worth. At the beginning the video posted below, a Stand Up Wireless worker says that the phones can be sold for $40. The actual value of a Stand Up Wireless phone is unclear.
Meanwhile, the public is footing the bill for the program. The FCC’s Universal Service Fund is made up of a Federal Universal Service charge tacked onto all phone bills, whether landline or wireless.
In 2012, the FCC reviewed the criteria and expense of Lifeline and agreed on a new set of standards. The FCC said reforms to the program should save the agency $2 billion by the end of 2014.
The report found 1.1 million duplicate subscriptions to the phone program, which has a one phone per household limit. An agency press release said that number made up more than 9 percent of the program’s enrollment.
“[I]n today’s era, with one-third of Americans having cut the cord to wireline phone service, it’s appropriate that Lifeline supports wireless service,” said an FCC spokesman to MailOnline, noting that "any waste, fraud, or abuse is unacceptable."