How TriMet loses over $85k/year to credit card thieves.

Credit card thieves are buying TriMet passes with stolen credit cards and reselling them to transit users for cash (at a discount), costing the agency $85k per year.
The Oregonian‘s Joseph Rose has the story.

Apparently, credit card thieves have figured out a good way to quickly turn stolen plastic into cash before the theft is discovered and the card is cancelled: Use them at TriMet ticket machines to buy monthly TriMet passes ($88), a transaction which does not require any identification, PIN number, or signature, and then sell them for cash (often $20) to transit passengers.

What happens when this occurs? The thieves, assuming they are not caught, get the $20. Whoever buys these passes gets a good deal on the pass–as TriMet passes are non-electronic and non-personalized, there is no way for the agency to revoke the pass. The person whose card it is, assuming the theft is properly recorded, gets their money back. The loser? TriMet, who has to eat the chargeback. According to Rose, TriMet lost over $85k last year to this scam.

Much of the problem stems from the fact that no ID, PIN number, or other form of security, other than a credit card, is needed to purchase monthly passes at vending machines. TriMet could upgrade the security of its ticketing machines (bank ATMs require PINs and frequently come with cameras, if nothing else to snap pictures of fraudsters that could assist the police in catching them). But according to spokesperson Mary Fetsch, upgrading the ticketing machines to deter this sort of fraud would cost more than what TriMet loses each year. As she put it, “its the cost of doing business”.

A better way to put a stop to this, and provide lots of other advantages to passengers–electronic ticketing. If nothing else, it would permit TriMet to revoke fraudulently-purchased passes, so it isn’t providing free bus rides–and were TriMet to crack down in this fashion, word would probably get out and there would no longer be a market for stolen passes in the first place.

26 Comments

26 Responses to How TriMet loses over $85k/year to credit card thieves.

  1. bjcefola
    May 21, 2011 at 5:00 pm Link

    Or trimet could educate passengers not to participate in theft by buying what are effectively stolen passes.

  2. ws
    May 21, 2011 at 5:14 pm Link

    bjcefola:

    Absolutely right. Not only don’t give money, but report them if possible (show how, where, why you should report them).

    I think TriMet (and most government agencies) has a lack of user/rider education. I see signs that say “see something, say something.” Well OK, sounds good.

    How and to whom? Do I ring the emergency button and talk to the driver?

    I don’t want to get started on the lack of fare inspectors that TriMet has…

    A good example is yesterday. I saw two street youths with a dog get on the MAX at the Zoo and ride it into downtown.

    -Should I say something?
    -What are my rights in telling someone they can or cannot do something on MAX?
    -Who do I tell?
    -What do I do if no official person is around to tell? Do I send an email later at home??

    People need to know. Educate us, TriMet. People want to do the right thing and the average rider is the best bet in reducing crime. This goes for more than just stolen tickets…

  3. al m
    May 21, 2011 at 8:11 pm Link

    I bet they lose much more than that due to broken fare boxes but at least they didn’t lose as much as the MBTA did:

    http://news.bostonherald.com/news/regional/view/2011_0520ag_ticket_scam_largest_in_t_history/

  4. Dave H
    May 21, 2011 at 8:31 pm Link

    This could also be solved by changing some federal laws regarding credit cards, but with the lobbyists that banks have that’s quite unlikely.

  5. Douglas K.
    May 21, 2011 at 8:57 pm Link

    Would upgrading the machines come with ongoing maintenance costs? Or is it largely a one-time expense that could pay for itself over four or five years and forever after?

  6. Joseph E
    May 22, 2011 at 5:54 am Link

    85 K per year? That’s not even one bus per hour. Stopping that scam isn’t worth Trimet’s time, though it would be a nice benefit of electronic passes.

    Los Angeles has made the mistake of paying $20 million to install fare gates at light rail and subway stations. Of course you can still evade the fare by hoppin over the gate (this happens in NY all the time), so it is very unlikely we will ever make back the money invested.

    If you want to reduce fare evasion, add more fare inspectors on the trains, and see if the additional revenue pays for it.

  7. Matt
    May 22, 2011 at 8:56 am Link

    Or they could require you to input the zipcode associated with the card, which is common at some gas stations, NYC MetroCard machines, etc.

  8. ws
    May 22, 2011 at 1:06 pm Link

    To those who don’t think this is a big deal:

    I am so tired of people and government not caring about small, petty crimes. These small crimes add up everywhere in the city. It is making Portland incredibly unlivable, imo. Nobody gets fined for littering. Nobody gets in trouble for graffiti. Nobody gets in trouble for being loud on the MAX or bringing their dog on the MAX or smoking in transit stops and not following simple, simple, simple rules that are black and white.

    There’s zero consequences on TriMet. Even when fare inspectors catch people who have not paid — the numbers overwhelmingly show they let them go with a warning. WTF? Give them a fine, no exceptions unless there’s a good reason.

    And the law abiding riders and citizens of our city are being pushed away to their automobiles and suburban homes simply because they do not want to do deal with non-criminal raucous behavior. I guess I don’t blame them.

    Being asked for 20 dollars for a monthly pass that costs 90+ dollars is more than just the 85k lost to TriMet. I don’t look at it like that. What I see is an individual who stole someone’s private information and committed a crime AND has the audacity to sell it to me right in public.

    That’s insulting, not to mention these people are buying more than just TriMet tickets.

    I took a walk along waterfront the other day while it was sunny, and I was absolutely floored at how many instances of open air drug trading that I saw.

    Portland has created a world of exceptions. In my book, these exceptions have created holes for criminal activity to take root without consequences. Evidence by the lack of people’s will to pursue a crime like this.

    Here’s my take on doing nothing. 85k this year, 200k next year.

    /Rant off.

  9. jimkarlock
    May 22, 2011 at 4:05 pm Link

    We don’t have money for police – the city council gave it to the developers. Almost $100 million per year from city/county social services, schools, fire and police.

    See pdf page 56-75 of this:
    http://www.co.multnomah.or.us/orgs/tscc/graphics/10-11annualreport.pdf

    Thanks
    JK

  10. Bob R.
    May 22, 2011 at 4:27 pm Link

    So, JK, do you believe that we should be allocating $100M more per year to Police, Fire, schools, and social services? Is it your position that these services are under-funded by approximately that amount, and therefore, if we weren’t giving money to developers as you assert, then we should be spending that amount on those items? Is $100M per year the optimal amount, or should it be higher?

  11. jimkarlock
    May 22, 2011 at 7:43 pm Link

    Bob R. So, JK, do you believe that we should be allocating $100M more per year to Police, Fire, schools, and social services?
    JK: Data:
    * PPS just passed levy for operations.
    * PPS wants more for maintenance.
    * Other Multnomah county schools are short of money.
    * Police have cut back on number of officers & closed stations over the years while our population grew.
    * County is also short of money for social services.

    So, lets give the money to developers instead!!!

    Thanks
    JK

  12. Bob R.
    May 22, 2011 at 7:58 pm Link

    I’ll repeat the question. To save space, please scroll up and read it again.

  13. jimkarlock
    May 23, 2011 at 5:18 am Link

    I’ll repeat my answer. To save space, please scroll up and read it again.

  14. Bob R.
    May 23, 2011 at 10:17 am Link

    If only your answer actually answered the question. It remains, unanswered.

  15. Alexis
    May 24, 2011 at 6:11 pm Link

    ws – a monthly adult all-zones is $88. That’s $90-minus, not $90-plus.

  16. jimkarlock
    May 26, 2011 at 11:40 pm Link

    Bob R. Says:: So, JK, do you believe that we should be allocating $100M more per year to Police, Fire, schools, and social services? Is it your position that these services are under-funded by approximately that amount, and therefore, if we weren’t giving money to developers as you assert, then we should be spending that amount on those items? Is $100M per year the optimal amount, or should it be higher?
    JK: Without a thorough analysis of all of these departments, it is impossible to say whether or not they need more money and how much.

    However under the current (probably highly wasteful) system, cutting needed services (allegedly to save money) indicates a need for more money.

    I believe that such services are far more important to our society’s well being than money to build TODs, millionaire condos and light rail to replace bus lines.

    So, Bob, do you believe that tax money is better allocated to building millionaire condos than to schools and social services?

    Thanks
    JK

  17. ws
    May 27, 2011 at 12:22 am Link

    Alexis:

    I’m not sure the point of your post. But TriMet will be raising its prices. I used that as the basis of my post as I though it was going into effect sooner than it will be.

    http://trimet.org/news/releases/apr26-fare-increase-reading.htm

  18. Bob R.
    May 27, 2011 at 12:28 am Link

    So, Bob, do you believe that tax money is better allocated to building millionaire condos than to schools and social services?

    That is an interesting question. To my knowledge, no subsidies are currently going to condos which are only affordable to millionaires, so the premise of your question is off-base.

    As for “TODs” and “light rail”, generally I am in favor of such subsidies, depending on the specific project. (This should be well known by now.) The Yellow Line, for example, even though it did not fully “replace” the #5, resulted in significant ridership gains in the corridor, provides a higher-quality service in the subset of the #5 corridor that it does serve, as well as improving the street environment in general. (See dispatches from the yellow line for my analysis and for the resulting debate.)

    However, if you were instead to ask me if I favored finding a mechanism to ensure that subsidies didn’t go to units which were affordable only to millionaires (or, for that matter, to persons earning significantly above median income), yes, I would favor eliminating such subsidies.

  19. jimkarlock
    May 27, 2011 at 2:20 am Link

    Bob R. Says: To my knowledge, no subsidies are currently going to condos which are only affordable to millionaires, so the premise of your question is off-base.
    JK: “currently”???
    Recent past – North Macadam urban renewal district. Every building there is subsidized by the urban renewal district’s spending on roads, streetcar, light rail, and park(s) (normally the responsibility of the developer) etc. And, arguably at least some of those units are affordable only by millionaires.

    Bob R. Says: As for “TODs” and “light rail”, generally I am in favor of such subsidies, depending on the specific project.
    JK: Of course, my basic point is do you favor taking money from schools and social services (through urban renewal) to pay for things such as TODs and light rail?

    Thanks
    JK

  20. Bob R.
    May 27, 2011 at 8:00 am Link

    “currently”???

    I said “currently” not to hide anything but because I simply didn’t know of an example of a millionaires-only condo complex from the past. And apparently, there wasn’t. So drop the “currently”.

    In any case, you’ve moved the goalposts again. You’ve gone from railing against subsidies for “building millionaire condos” to other infrastructure projects that happen to be available to everyone to use. If you’re going to argue against urban renewal funds going to parks, that’s pretty much an outlier and way far removed from the original “millionaire condos” argument.

    If you want to argue against the very existence of urban renewal districts, to the extent that you believe they don’t raise enough revenue over not doing a district and therefore leave less revenue available to the general fund, that’s fine. “Millionaire condos” is a distraction.

    And since you’re repeating the “millionaire” meme, let me suggest that rather than “taking money from schools” to pay for other programs, that instead we look to revenues, and, it just so happens, “millionaires” are taxed quite a bit less than they have been in the past.

  21. jimkarlock
    May 27, 2011 at 9:05 pm Link

    Bob R. Says: I said “currently” not to hide anything but because I simply didn’t know of an example of a millionaires-only condo complex from the past. And apparently, there wasn’t. So drop the “currently”.
    JK: And I did not write “only” so drop the only. The fact remains that, at the time of building, many of those condos were only affordable by the wealthy, hence millionaires. (Probably literally millionaires too!)

    Bob R. Says: In any case, you’ve moved the goalposts again. You’ve gone from railing against subsidies for “building millionaire condos” to other infrastructure projects that happen to be available to everyone to use. If you’re going to argue against urban renewal funds going to parks, that’s pretty much an outlier and way far removed from the original “millionaire condos” argument.
    JK: No. The original statement still stands.
    And I the conversation naturally expanded to include other things paid for with urban renewal money. (Urban renewal money being the subject of my original post. Millionare condos was merely one example of UR spending. I just added more examples.)

    Bob R. Says: If you want to argue against the very existence of urban renewal districts, to the extent that you believe they don’t raise enough revenue over not doing a district and therefore leave less revenue available to the general fund, that’s fine. “Millionaire condos” is a distraction.
    JK: Its not that they “ don’t raise enough revenue”, its that ALL the UR district revenue is diverted from other, more needed services like social services, schools, fire & police.

    Bob R. Says: And since you’re repeating the “millionaire” meme, let me suggest that rather than “taking money from schools” to pay for other programs, that instead we look to revenues, and, it just so happens, “millionaires” are taxed quite a bit less than they have been in the past.
    JK: I hope you are not advocating raising taxes on employers! Such action will result in fewer employers and hence fewer jobs. (Note that most serious employers are in the upper income brackets)

    Anyway, I could go for a tax on UR housing at a rate of, oh, say, 200% of the amount of public money that went into subsidizing any unit that is not affordable by a person whose income is, say, 150% of the median area income.

    Thanks
    JK

  22. Bob R.
    May 27, 2011 at 10:07 pm Link

    I hope you are not advocating raising taxes on employers! Such action will result in fewer employers and hence fewer jobs.

    Nonsense. The right kind of taxes on high-income earners (which, by the way, are not always “employers”) encourage investment. Investments in your company and employees are tax-deductible, you see. Facing the dilemma of doing something with money as opposed to being taxed on it, most people choose doing something.

  23. Bob R.
    May 27, 2011 at 10:10 pm Link

    And I did not write “only” so drop the only.

    You said:

    So, Bob, do you believe that tax money is better allocated to building millionaire condos than to schools and social services?

    Forgive us if we weren’t to understand that you oppose subsidies which benefit everyone but might also benefit a few millionaires.

    Anyway, I could go for a tax on UR housing at a rate of, oh, say, 200% of the amount of public money that went into subsidizing any unit that is not affordable by a person whose income is, say, 150% of the median area income.

    Great, you’re a progressive. Now we can talk ideas.

  24. jimkarlock
    May 28, 2011 at 1:18 am Link

    Bob R. Says:

    And I did not write “only” so drop the only.

    You said:

    So, Bob, do you believe that tax money is better allocated to building millionaire condos than to schools and social services?

    Forgive us if we weren’t to understand that you oppose subsidies which benefit everyone but might also benefit a few millionaires.
    JK: Where did I say (or imply) “only”?

    And I see no hint of a judgement of which is more worthy: social services, schools, fire & police or UR spending, in general, or on specific projects.

    Bob R. Says:
    Anyway, I could go for a tax on UR housing at a rate of, oh, say, 200% of the amount of public money that went into subsidizing any unit that is not affordable by a person whose income is, say, 150% of the median area income.

    Great, you’re a progressive. Now we can talk ideas.
    JK: Glad we agree that it is a good idea to recover 200% of the UR spending on posh condos.

    Now can we agree that Trimet should recover its spending on transportation for the upper income. Perhaps by setting fares at a bit above actual cost, then using tax money to provide transportation vouchers for the needy?

    Thanks
    JK

  25. kitten
    May 28, 2011 at 10:16 am Link

    As others have said: small change. $85k is nothing, sounds like a lot but seriously not. With $440 million in revenue, it accounts for .02% There are more cost-effective ways for TriMet to “save” money.

  26. Bob R.
    May 28, 2011 at 1:54 pm Link

    Perhaps by setting fares at a bit above actual cost, then using tax money to provide transportation vouchers for the needy?

    That I wouldn’t support as it would be inefficient and create an extra layer of bureaucracy. It also wouldn’t be correctly targeted.

    As Scotty has explained in detail before, the most expensive routes for TriMet to operate are the “social service” routes to outer, low-desnity areas with relatively low ridership. Whether you support those subsidized routes with vouchers or some other scheme, they’re still highly subsidized.

    People riding the busiest routes are in fact paying much closer to the actual cost of delivering service.

    It would be more efficient and less intrusive to first move to a distance-based fare system, which would shift revenues slightly more in line with the cost of delivering service.

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