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Tuesday, September 6, 2011

Big Fact: Clipper Loses Nearly $700,000 a Year Because of Negative Balance Feature

Muni New Faregates - Civic Center Station Secondary Gates

$700,000, what can you do with that kind of money? Who is responsible for this huge money waste? You can blame the MTC for the idea, but also members of the general public who enjoys "saving money" at the expense of honest taxpayers who doesn't cheat Clipper.

Here's the whole situation: Clipper cards have a negative balance policy where passengers can allow their card funds to go into the red, but the card won't be usable until the funds are replenished. This was to benefit passengers taking long distances but accidentally ran short in their e-cash purse. This got exploited by people when they realized that they could buy a Clipper card with a very minimal value of e-cash and use the card just once for a ride valued at more than the e-cash balance, and just throw the card away.

This problem went into high gear when news media outlets started telling people how to cheat Clipper. My argument on a previous entry on my blog is the media has the right to free speech and press, but should have suppressed it on moral grounds noting that doing so will cost every taxpayer more money to cover the abuse. Only one news station at least said live on air that the people at the station had a debate if it should be aired or not on moral grounds, but tagged along with other news agencies to spread the word.

The MTC had to do something to stop the widespread abuse costing them a lot of money, and they decided to raise the minimum e-cash value from $2 to $5 for new cards. That did reduce the abuse, but still, abuse is rampant as seen below...

How did I find out? Here's what you need to know:
In a recent draft report for the Operations Committee, it states:
"...approximately 8,000 additional cards with new negative balances each month, and the aggregate negative balance amount increases at a rate of roughly $30,000 per month." (Page 18 of 30, paragraph two of the draft report).

Note: This calculation was provided AFTER the minimum e-cash was raised to $5.
If you like cracking numbers...
  1. $3.75 average negative balance per card.
  2. $360,000 of transit fares a year due to exploiting Clipper.
  3. 96,000 cards per year in the trash.
  4. $3.53 per card's procurement and distribution costs.
  5. $338,880 worth of cards thrown in the garbage (procurement/distribution cost multiplied by 96,000 cards)
GRAND TOTAL: $698,880 of taxpayer money wasted per year due to cheaters.
Or basically $700K.

Now that I've crunched the numbers, will the MTC and Clipper finally find a solution to stop the negative balance policy? There's plenty of ways to stop the abuse:
  1. For BART, exitfare machines are modified to force Clipper users to pay the difference before being allowed to exit.
  2. For Golden Gate Ferry, no boarding the ferry unless there's an equal or higher amount balance on card. Anyway, there's add value machines just feet away from the ferry terminal gates at all three locations.
  3. All card users who wants to use the benefit must register their card with Clipper.
  4. Reduce the negative balance to $5.
  5. Restrict a card going to the red once or twice in a month. People should learn a lesson.
  6. Add a card acquisition fee. No more free handouts of cards.
  7. Or just no negative balance allowed. This might complicate things for tag-on and tag-off agencies like BART, Caltrain, and Golden Gate Transit, but they'll find a solution.

Akit's Opinions
In my opinion, people who abuse and exploit Clipper's negative balance policy are scumbags; actually, worse than scum, to a level that I'm not going to describe. This feature was for the common good for everyone, and now is costing us taxpayers nearly $700,000 a year.

That $700K could help Clipper do a lot, from purchasing new machines for the public to use, paying a contractor to add additional features to BART ticketing machines, getting the smaller transit agencies up and running, or having Clipper representatives at major transit hubs and stations for a year.

Coming up tomorrow at Akit's Complaint Department: Why didn't Clipper enforce a $5 card acquisition fee starting on July 1, 2011?


thielges said...

Akit, you state "Clipper cards have a negative balance policy where passengers can allow their card funds to go into the red, but the card won't be usable until the funds are replenished. This was to benefit passengers taking long distances..." (emphasis mine)

Well not really. Though the negative balance feature does benefit people by allowing them to take one last trip, the reason for allowing a negative balance has a different basis. Clipper has to allow or deny boarding at the time of entry. At that point it doesn't know how far you intend to travel. So long as you have enough cash for the absolute shortest journey Clipper must allow you to board. Since most people actually travel longer distances Clipper must accommodate a negative balance when tagging off because it cannot prevent you from leaving most transit systems. The alternative is the BART system "addfare" machines which is an even worse hack.

Akit said...

That's why Clipper is so complex and was willing to bend over backwards to adopt the old rules set in place by transit agencies.

Other than BART, the other two agencies is Golden Gate and Caltrain that due to their zone system, they have to let cards go negative. Banning it outright may not be the best solution; but Clipper and the agencies could ask those passengers the minimum amount to board w/a card is higher than the lowest fare.

Anonymous said...

There is something that is not taken into account though. How much additional money are Clipper and transit systems taking in due to malfunctioned card readers?

I've been overcharged roughly $10 so far this year due to malfunctioned devices that did not have their clocks set correctly. For example one of the time stamps registered me as boarding 2:33am on a Tuesday morning and another one at 10:22am on a Thursday when I was sitting in a job interview that I drove to.

I have called Clipper at least 10 times and this issue unresolved since I have not received a single credit from Muni or Clipper. Every time the answer is that they will transfer the case to Muni.