The Federal Communications Commission will overhaul the government’s decades-old Lifeline Program after discovering nearly $5 million has been spent on providing free phone and internet services to thousands of dead people, most of them in California.
The FCC’s reforms target states, among them California, that opt out of the federal verification process required to qualify for the free services. The move has ignited a battle between FCC Chairman Brendan Carr and California Gov. Gavin Newsom, a likely 2028 Democratic presidential candidate.
“It should go without saying that only beneficiaries that are both living and here legally should qualify for benefits under this program. But the data to date shows that this is not the case,” FCC Chairman Brendan Carr said.
Mr. Newsom’s press team accused the FCC of politically targeting the state and the governor.
“We take program integrity seriously. But it’s misleading — and political — to single out California. This is a nationwide issue, not a California scandal,” Mr. Newsom’s press team said last week.
California, however, was the main offender in a new FCC audit of the Lifeline program.
Lifeline providers over the past five years have pocketed $5 million from the federal government to provide phone or internet service to 116,000 dead people in the three opt-out states, the audit found.
More than 80% of the fraud, involving nearly 95,000 people, was traced to California, one of the three states allowed to opt-out of the strict federal verification program.
The audit found 20,000 deceased Lifeline subscribers in Texas and another 2,200 in Oregon, the two other states that opt out of federal verification.
At least 16,774 dead people, and potentially as many as 39,362, from the three states were first enrolled in the Lifeline program after they died, the audit found. More than 77,000 died after enrolling in the program, but others continued to collect the benefit illegally.
In September alone, more than 11,000 dead people were enrolled in the program in the three opt-out states at a cost of approximately $100,000.
The $1 billion federal program, created in the 1980’s, is paid for by the Universal Service Fund, which is managed by the FCC.
Telecommunications companies subsidize the fund with a percentage of their revenue and they pass along the cost to consumers with an extra monthly charge on their phone and internet bills.
The program provides a $9.25 monthly subsidy to households that earn less than 135% of the poverty level as well as those households receiving food stamps or enrolled in Medicaid or other social welfare programs. Qualifying households and individuals on tribal lands are eligible for a monthly benefit of $34.25.
Adults are also eligible for the benefit if they have children and are earning below 200% of the poverty level.
The federal government doesn’t supply free phones, but many providers who participate in the federal program provide those who enroll with a free or heavily discounted smartphone.
The FCC audit discovered many instances of the same person enrolling in the program in multiple states.
From December 2020 until September 2025, the audit found more than 270,000 instances where “an opt-out state subscriber was claimed two or more times in the same month,” with identical names, dates of birth and Social Security numbers.
The FCC paid phone providers $5.5 million to subsidize benefits for those subscribers.
The program has long been riddled with instances of fraud and the FCC has taken different actions over the years to try to tighten verification and crack down on misuse of the funds.
During the Obama administration, program recipients nicknamed the free devices provided by the carriers, “Obama phones,” even though the Lifeline program was created during the Reagan administration.
The term has endured. TAG Mobile in August offered consumers a list of “Free Obama phone models,” eligible under the Lifeline program.
The FCC will vote later this month on proposed new rules to crack down on fraud.
The changes include “enhanced requirements,” aimed at ensuring the Lifeline Program only serves “legal, living and eligible Americans.”
In many states, individuals and households are eligible for additional Lifeline benefits. California, for example, provides an extra $16.50 in state funds to those who are eligible for Lifeline benefits as well as unlimited talk and texts and a monthly data allowance.
As Mr. Carr moves to crack down on fraud, his changes to the Lifeline Program have intensified a clash with Mr. Newsom over California’s own verification process.
On Sunday, the FCC blocked California from continuing to use its own verification process to run the Lifeline program. But it wasn’t a direct result of the audit’s findings.
The move followed Mr. Newsom’s decision last November to sign a bill eliminating the requirement that California applicants provide a Social Security number. The bill makes it easier for illegal immigrants to receive the benefit.
The California law also blocks the federal government, particularly immigration enforcement officials, from accessing information about Californians enrolled in the Lifeline program.
As of Sunday, people living in California can still qualify for the Lifeline program, but must apply through the federal verification system and provide a Social Security number and other information.
“California is all for sending your taxpayers dollars to people here illegally,” Mr. Carr said. “And Governor Newsom recently signed a bill that makes it effectively impossible for the FCC to ensure that the federal Lifeline dollars we administer go to their intended recipients.”
The FCC will consider a number of rules changes at its Feb. 18 meeting, including restricting the benefit to U.S. citizens and qualified legal immigrants and requiring new verification procedures to improve the program’s integrity, including a ban on allowing any state to opt out of the federal verification process.
