If you get free phone or internet in California, watch out for this snag

Rick, a learning disabled retiree, was at his Los Angeles apartment last month when a salesperson from Assurance Wireless stopped by to offer a free mobile phone account, complete with a free phone.

The next thing he knew, Rick had lost the $30-a-month discount he’d been getting on his broadband account with Spectrum, a completely different company.

This is just the sort of nasty surprise that lower-income people have experienced not only in California, but across the United States. Researchers have found that salespeople offering the free phone service, known in California as LifeLine, often leave consumers in the dark about the trade-offs that come with it.

In particular, each household can have only one account subsidized by LifeLine, and they can have only one supported by the Affordable Connectivity Program, which enables lower-income people to get free or deeply discounted broadband service. Free mobile phone service can be funded by either LifeLine or ACP, so you have to be careful to understand which one’s at issue if you sign up.

Rick’s brother Dave (who asked that their last names not be used to protect Rick’s privacy and prevent him from becoming a target for scammers) is an actuary in Santa Barbara, and he was able to undo the damage. But Dave said he wonders how many times this sort of thing has happened to consumers who don’t have financially savvy people looking after their interests.

The answer, consumer advocates say, is probably a lot, even though there are safeguards designed to prevent it from happening at all.

Aggressive sales tactics

The questionable tactics employed by some LifeLine companies around the country prompted the Federal Communications Commission’s Office of Inspector General to issue a consumer advisory in March. Some (unnamed) companies that offered both LifeLine and ACP services were misleading customers into applying for unwanted ACP subsidies or transferring their existing subsidies to LifeLine service, the OIG warned.

“Customers who do not carefully review the online process may find themselves enrolled in ACP or have their ACP service transferred away from their preferred provider when they seek [LifeLine] service from one of the providers employing these tactics,” the advisory states.