A recent report from the Federal Communications Commission Office of Inspector General (OIG) found that consumers are paying millions to subsidize internet for the dead. Between 2020 and 2025, the FCC’s Lifeline Program paid out money from the Universal Service Fund (USF) to provide internet discounts and devices for the deceased, with 81 percent of such fraudulent activity occurring in California. Unlike the ghosts it serves, Lifeline’s pattern of waste, fraud, and abuse is alive and well.
The California fix was the easy part. It involved FCC Chairman Brendan Carr revoking California’s status as an ‘opt-out’ state, which had allowed it to self-verify if Lifeline subscribers are eligible for the program. But the structure of the Lifeline program is the bigger issue. To truly root out the waste, fraud, and abuse littering the Chairman’s inbox, the Lifeline program itself needs an overhaul.
At its heart, the Lifeline Program aims to provide low-income Americans with a discount on a phone and broadband service. This sounds helpful in theory, but it must have the right structure to be effective in practice—and the structure is anything but helpful.
As a sub-program of the USF, Lifeline is funded through a fee on telephone carriers. Carriers pay the Universal Service Administrative Company (USAC) and recoup the cost by billing consumers. Funding USF directly from carriers to USAC shields the process from Congressional accountability since the money is never subject to appropriations.
Once fees are collected from telephone carriers, the USAC funds participating service providers, depending on how many customers the provider claims are eligible. Building a government program around such an honor system leaves the door open to waste, fraud, and abuse.
That is why a 2017 investigation by the Government Accountability Office (GAO) could not verify eligibility for at least 1.2 million individuals—36 percent of the participants reviewed. Most recently, the 2026 OIG report that hit Chairman Carr’s desk examined the last half-decade and found up to $5 million had been awarded through Lifeline program subsidies on behalf of deceased subscribers, with as many as 39,362 having been enrolled posthumously. Consumers paid for these subsidies each month on their phone bill, with no beneficiary on the other end. Congressional reform is certainly needed to make Lifeline and other USF programs more efficient—but legislation has stalled time and again—leaving no option but for the FCC to act.
On February 18th, the FCC will vote on a plan to ensure Lifeline funds are used in the most efficient way possible. The plan includes increasing scrutiny on discount eligibility, holding opt-out states to a higher standard of self-validation, encouraging more principled practices at the service provider level, and streamlining Lifeline rules to eliminate any stakeholder confusion going forward. As the date approaches, more details will emerge, but the outline released in the meantime indicates the FCC is thinking in the right direction to ensure consumer dollars are used responsibly.
The problem is that the FCC can only do so much. Congress must play a key role in combating waste, fraud, and abuse, and the American Consumer Institute highlighted some solutions last year.
To start, Congress should scrap the problematic funding structure in exchange for appropriations. The funding structure is so controversial that it was the center of its own Supreme Court battle in 2025. Although it survived the constitutionality check, it still shields the USAC—and the companies it subsidizes—from real accountability.
Then Congress should look to consolidate or eliminate duplicate programs. GAO research found 133 federal broadband programs in 2023, often lacking coordination despite pursuing the same goal of delivering high-speed telephony or broadband connectivity to American consumers. State-level programs add even more duplicity since many manage their own universal service funds.
While California may have become a hotbed for Lifeline abuse, Congressional dysfunction is the real culprit behind the corruption. With an opaque program structure out of reach of Congressional oversight, it’s no wonder that waste, fraud, and abuse have been an issue for as long as they have. But with the right combination of FCC and Congress, the USF might finally achieve the bare minimum—don’t subsidize the dead at the expense of the living.
Nate Karren is a policy analyst with the American Consumer Institute, a nonprofit education and research organization. Follow Nate on X @NateKarrenOnX.