FCC Proposes $12M Fine for Abuse of Disability Fund

By Josh Long

A company that provided communications access to people with hearing and speech disabilities failed to verify the names and/or mailing addresses of at least 40,000 registrants and improperly billed a fund millions of dollars, according to the Federal Communications Commission.

Purple Communications Inc. received millions of dollars in reimbursements from the Telecommunications Relay Service (TRS) Fund for serving customers whose fictitious names revealed the individuals were not eligible users, FCC said. Although federal law requires TRS providers such as Purple confirm the names and mailing addresses of their users, the company provided service to individuals with monikers such as “sdfsdf cicwcicw,” “ Myname Yourname,” and “Lot$a Money,” the agency said. Other names such as “F…Y…” were vulgar, the FCC said.

Customers who are eligible for the program receive free service and telecommunications providers are reimbursed. The TRS Fund is supported through contributions from providers of interstate telecommunications services.

FCC has proposed fining Purple Communications $11.9 million.

“Purple’s actions have threatened the integrity of a fund that is designed to help persons with hearing and speech disabilities make phone calls,’’ the FCC Enforcement Bureau Acting Chief Travis LeBlanc said today in a statement. “This is not only a misuse and waste of government resources, but it comes at the expense of a community that relies on this fund for basic communications needs.  We have zero tolerance for this type of abuse.”

The FCC explained its proposed fine is based, in part, on the amount Purple received from the TRS Fund from June 2010 through January 2011 associated with the false names. The company also must reimburse the TRS Fund for the improperly billed amounts, the agency said.

In a written statement commenting on the FCC’s announcement, Purple characterized the agency’s allegations as “irresponsible, false and grossly misleading.”

“The access of IP Relay services by unauthorized users during the time in question – for which the FCC now wishes to fine Purple – was the direct result of the FCC’s own rules, which mandated that IP Relay providers permit access to anyone who registered before the provider had the opportunity to verify their registration information,” the company said. “At this time, providers were prohibited from pre-screening registrants, and were instead forced to grant them immediate access to calling services. To combat misuse of the service and abuse of the TRS Fund, Purple implemented a verification system that effectively identified and deregistered the vast majority of unauthorized users in a matter of hours and days after registration.”

Although the company told the FCC it implemented anti-fraud measures, the agency stated the measures “never verified a user’s name or mailing address,” according to an FCC document proposing the fine.

In recent years, FCC has adopted a number of reforms in order to cut down on abuse and fraud in the large program.

For the fund year from July 2013 through June 2014, the funding requirement for the TRS Fund was $995.5 million. In the current year, the fund Administrator estimated a funding requirement of $789.7 million, an FCC spokesperon said.

Effective July 1, 2013, per-minute compensation rates under the TRS Fund ranged widely depending on the service from $1.01 (IP Relay) to $5.98 (video relay service (VRS). Other per-minute rates were $2.16 for interstate traditional telecommunications relay services (TRS); $3.30 for interstate Speech-to-Speech relay service (STS); and $1.79 for interstate captioned telephone service (CTS) and Internet Protocol captioned telephone service (IP CTS).

In a July 1, 2013 order adopting the rates, the FCC said it “continues to review closely the fund size and to guard against waste, fraud, and abuse.”