By Yuliya Chernova 

Efforts to reduce fraud in a program that subsidizes phone bills for low-income Americans may be resulting in a large number of eligible customers being dropped from its rolls.

Under the Federal Communications Commission program, called Lifeline, phone companies receive money for providing discounts to low-income customers. In 2012 the FCC passed new regulations designed to reduce fraud in the program, including a requirement that all beneficiaries certify their eligibility annually. That led to significant declines in enrollment. But this year's drop was especially large.

In New York State, for example, about 62,000 people, or 62% of Verizon Communications Inc. landline customers who were receiving the Lifeline benefit last year, were deemed ineligible as of January, according to a document Verizon filed with the FCC.

It appears that a new certification procedure, as well as a new identity-verification system, both introduced last year, are causing problems.

Among those dropped are people who appear to qualify based on the program's criteria. Sofiya Altshuler, of Brooklyn, N.Y., said she was surprised when she received a Verizon bill for $59.89 in February, up from $6.31 in January. According to documents reviewed by The Wall Street Journal, Ms. Altshuler remains a recipient of several programs such as Supplemental Security Income and Medicaid that the FCC counts as qualifying for Lifeline.

Some previous beneficiaries of the program also said Verizon had been unresponsive to their complaints about being dropped.

"They are torturing us," said Bella Kamenetskaya, a resident of Brooklyn, who said she spent hours on hold with Verizon's customer service and faxed her father's Lifeline applications several times with supporting documentation to no avail.

New York state and city lawmakers, among them City Council Member Margaret Chin, state Sen. Daniel Squadron and Assemblyman Sheldon Silver, on April 17 sent letters to Verizon and the FCC detailing problems their constituents faced and asking for fixes.

"We are looking into the situation," said Mark Wigfield, spokesman for the FCC.

John Bonomo, spokesman for Verizon, acknowledged the large-scale dropping of customers from the program and said that although it wasn't limited to New York, "New York was the bulk of it."

Tracfone Wireless, a large provider of wireless phone service to Lifeline subscribers in New York, doesn't appear to have similar problems. According to documents it filed with the FCC, just 8% of its Lifeline customers were deemed ineligible this year.

Mr. Bonomo said last year was the first time that Verizon asked Universal Service Administrative Co., or USAC, to conduct the recertification process in New York. USAC is an independent not-for-profit organization that administers the Lifeline problem under the direction of the FCC.

USAC was given the authority to conduct recertification under the 2012 FCC revision. About 2% of Lifeline customers around the country were being recertified by USAC for the first time last year, according to the FCC.

Mr. Bonomo said that an unusual number of Lifeline customers didn't respond to requests to confirm their eligibility. "They disregarded it. You get junk mail and you toss it," Mr. Bonomo said is the assumption that Verizon has at this point.

Mr. Wigfield of the FCC said that "to address some of the problems experienced this year," the FCC is making changes in how USAC will handle the recertification process, including giving carriers more time to update contact information of consumers.

Getting back on the program's rolls is proving difficult for some customers.

Despite faxing her application with supporting documentation twice, Ms. Altshuler said she still isn't back in the Lifeline program.

Mariam Khachatryan, who directs a social assistance program for about 1,200 Brooklyn residents who are Holocaust survivors from the former Soviet Union, said her clients were surprised by much higher phone bills and that many haven't been able to reinstate benefits.

"This is very, very upsetting for elderly people, these high bills for no reason," Ms. Khachatryan said.

Last year the FCC authorized USAC to start using a new identity-verification system for all applicants as a result of the 2012 revision, according to USAC representative Philip "Pip" Colvin.

Mr. Bonomo said that Verizon found that many of its Lifeline applicants couldn't be verified in this new system, but it isn't clear why.

Mr. Colvin said that problems were caused in some instances by incorrect information sent to USAC about applicants by phone providers. He said he didn't have information as to what percentage of Lifeline applicants failed in verifying their identities via the new system.

Verizon added 70 people to handle the unexpected influx of requests, Mr. Bonomo said. "We feel that now we are pretty well caught up," he said, declining to provide a figure of how many applicants were reinstated.

Mr. Bonomo declined to say how much money Verizon collected from customers who were dropped from the discount program. He also said that there is no plan to reimburse customers, and that they would get the Lifeline discount once their application process is completed on future bills.

In 2014 the Lifeline program spent $1.6 billion to discount 12.4 million phone lines.

Write to Yuliya Chernova at yuliya.chernova@wsj.com

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