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The Real Deal: Free cell phones pulled from 130K people

Updated: Wednesday, March 20 2013, 12:56 PM EDT

ALBANY -  For years, the Federal Government has been passing out free cell phones to low-income folks as a way to make sure everyone has a way to call 911 in an emergency but the Lifeline Program is rife with fraud.  CBS6 first exposed some of the waste last week and tonight we're getting results.  130,000 people, who've been double-dipping are being kicked out of the program. 
       
Monique Crawford has dozens of cell phones all paid for, with your tax dollars.  "Each and every one of these phones work, at home I know I have about 30 and all of them are on," Crawford says as she holds up a number of phones she's gathered by going to different providers.  She qualifies for the Lifeline program and wasn't shy about admitting that she's been abusing it, "it takes me 5 or 10 minutes to get one (a phone), I walked out with this one just now," she says. 

The Federal Communications Commission is currently auditing the program.  So far, 135,000 people have been disqualified and the accounts of another 4.5 million people are being reviewed. 

"It's a good idea in theory but in practice, it doesn't sound like it's working," says Tom Smith of Latham.  Kathleen Horvath of Albany agrees, "I guess there's always going to be someone taking advantage of the system but I'm sure it's come in handy at the same time for those who need it...but clearly it sounds like there needs to be more oversight and if it's just for emergencies like they stated, then probably a more basic, generic phone that just has calling features would be more efficient," she says as opposed to smart phones with more than 200 minutes per month which is what's currently offered. 

Arkansas Congressman Tim Griffin wants to cut cell phones from the lifeline program all together, "a few years ago, someone had the idea that hey, we ought to convert it, or also allow, in addition to landlines, cell phones and that's when this thing got out of control," he says.  New York Senator Chuck Schumer tells CBS 6, "if there are 150,000 people who are fraudulently using this lifeline service, that's costing every one of us - because there's a little money that everyone pays into their phone bill for it. So we oughta be looking into it and weeding out the fraudsters."

It's clear the FCC needs to seal-up the cracks that so many are slipping through, if they want this program to serve its intended purpose.  There's been talk of expanding the Lifeline program even further to offer broadband Internet access to those who qualify.  Senator Schumer says the FCC has to get tougher on fraud now before he'll agree to any expansion of the program.