SurgePays Inc (SURG)

[StockItOut]

Letter to FCC from Mississippi-Public-Service-Commissioner, Brandon Presley.

In January of 2022, Commissioner Presley sent a letter to the FCC Inspector General asking for a Cease and Desist against SurgePays for blatant violations of FCC guidelines that govern the ACP.

Commissioner Presley’s letter to the FCC Inspector General outlining what he saw is below:

Yesterday, I was in Amory, Mississippi and saw a tent in a shopping center parking lot advertising "Free Service+Tablet" with a long line of customers. Because of the PSC's jurisdiction over designating Eligible Telecommunications Carriers for participation in the Lifeline program and the apparent transient nature of this event, I stopped to ask some questions. I first approached a lady who was walking away with a tablet. I asked her who was this company and she said, "I don't know, they just told me to get my Medicaid card and I would get this free tablet." I asked if she had any documents from the company and she did not. I continued to stand in line with around ten customers and watched several interact with representatives of this company who (a) did not even disclose who they were with, (b) did not articulate any of the required information in the Affordable Connectivity Program ("ACP") related to consumer protection, choice or nature of service and (c) were obtaining personal information and noting certain things in a spiral bound notebook. I should stress that these interactions were taking around two minutes each. It appeared the sales agents were solely looking at the qualifying documents, using the ACP portal and handing out these tablets in an obvious rush to the next person in line. I've truly never seen anything like it before in my twenty plus years in public life. Once my time in line came, I asked what company they were with and the lady said they were with "Surge" and were giving away "free internet and tablets" for a $10 connection fee. I should add here that no one was getting a receipt for their $10, which I confirmed later with another consumer. I explained who I was and why I was questioning their practices, gave her and her colleague a business card and asked them to have their supervisor contact me and conveyed that their actions were in possible violation of consumer protections standards set out by the FCC. I further explained that I would be reporting this to you. I also asked for a simple business card, which they did not have. These ladies stated that they were from Oklahoma and were just giving away the tablets. After posting on social media that consumers should beware of this business practice and this particular carrier, I received dozens of messages stating that this same carrier had been set up, with a tent, in many more cities in Mississippi. I also received a call from a constituent from my hometown who stated that they had received the tablet, never were told anything about the service, the price or anything related to the terms and conditions and knew of, at least, one case where a household received more than one device and enrollment by simply going from one town to the next. I am highly concerned about the waste, fraud and abuse of federal dollars aimed at helping bridge the digital divide that is possible with this business practice which is solely driven by apparent exploitation of unassuming citizens. I am also extremely worried about consumers being snookered by Surge. Consumers who are given ZERO information about who or what they are signing up with are highly likely to exceed data plans and be stuck with high bills all because they were lured to a tent in a shopping center because of the promise of a free tablet. I personally witnessed these sales agents in action and can attest that they in NO WAY informed consumers of anything. Their entire business operations consisted of a tent with a banner advertising free tablets (photo included) anchored by cat litter containers, a table, two chairs, two spiral bound notebooks and a plastic container filled with tablets. By way of this letter, I am asking you to please take immediate, appropriate action to have Surge cease and desist operations until your office can properly investigate this matter. Because the ACP does not allow state commissions jurisdiction in these matters, I am turning to you for help. These practices, that I personally witnessed, are prime for waste, fraud and abuse of the ACP. I will also be forwarding a copy of this letter to the Mississippi Attorney General in the event these instances rise to a violation of the Mississippi Consumer Protection Act. I am available to discuss further by way of email at [e-mail] or by phone at 1- 800-637-7722.

This letter to the FCC from Commissioner Presley was never mentioned by SurgePays management.

If found in violation, SurgePays could face a large fine. Section 503(b) of the Communications Act of 1934 (Communications Act) authorizes the Commission to impose a forfeiture against any entity that “willfully or repeatedly fail[s] to comply with any of the provisions of [the Communications Act].” Under this ruling, the FCC can assess a forfeiture against SurgePays of up to $237,268.00 for each day of a continuing violation.28 These rules have been in effect for the ACP since January 14, 2022. That means that SurgePays has potentially been in violation for 523 days (if we don't count any potential violations of the EBB). At $237,268 per day, that equates to a potential $124M dollar fine for SurgePays or a $248M fine if levied across both violations (agent registration and commission).

If required to abide by these rules, SurgePay's business model implodes. Unable to provide commissions, SurgePays network value proposition is invalidated and SurgePays would be required to hire enrollment agents on a non-commission basis in order to grow subscriber count. The addition of payroll overhead would almost certainly decimate any hopes of profitability.

SurgePays, Inc: Abusing FCC Low-Income Programs
https://www.birddogresearch.com/

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