Lifeline is a federal Reagan-era program intended to provide discounted phone service to low-income Americans.
After 2005, when cellphones were added, the program was prone to abuse and fraud.
Reforms introduced last year, including tightened eligibility requirements, trimmed the number of customers from 18.2 million last August to 13.2 million last month.
However, even with -- and perhaps because of -- the stricter requirements, tens of thousands of families are at risk of identity theft.
A Scripps News investigative team found that a contractor for two participating companies, Oklahoma City-based TerraCom Inc. and its affiliate, YourTel America Inc. -- posted online more than 170,000 personal records.
The records, based on applications or other enrollment documents, contained Social Security numbers, birth dates, home addresses, details about family finances and more.
READ THE STORY - Phone carriers expose low-income applicants to risk of ID theft (http://bit.ly/exposedrecords)
In the wrong hands, these records could offer one-stop shopping for identity theft. The two companies acknowledged that records for 343 people were accessed by unknown and potentially unauthorized individuals.
Finding the exposed information hardly required computer skill of a high order. Scripps found the records through a simple Google search.
Earlier this year, the two companies paid $1 million to the Federal Communications Commission to settle one investigation into business practices, and TerraCom faces similar inquiries from state authorities in Oklahoma and Indiana.
The program rewards participating phone companies for signing up subscribers by reimbursing them at least $9.25 per subscriber per month. The program is financed by a $2.73 monthly surcharge on Americans' phone bills.
The system has numerous points where personal information can leak. The FCC's demand for more extensive vetting of applicants has driven the carriers to demand still more sensitive information.
The carriers are prohibited from retaining information used to prove applicants' eligibility, but Scripps found personal documents collected by TerraCom and YourTel dating back to September on an unprotected website.
To improve oversight of Lifeline, the FCC is creating two new databases. One will aggregate the client lists from a range of federal welfare programs; the other will be a master list of Lifeline subscribers to prevent the unscrupulous from signing up with multiple carriers.
The databases will demand tighter scrutiny and greater security than Lifeline has heretofore shown. Illegal access to these databases by con artists would be more than a one-stop shop for identity theft; it would be a supermarket.
RELATED STORY - How consumers can protect themselves from ID theft (http://bit.ly/protectID)
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