Friday, July 27, 2007

Orphan exits: "Another way E-ZPass is ripping off consumers."

On e-toll roads, beware 'orphan exit' fee


Bob Sullivan
Red Tape Chronicles
Copyright 2007

Millions of drivers around the country use E-ZPass and other electronic toll collection systems to speed them on their daily drives, but consumers are discovering that there is a price to be paid for the convenience: loss of privacy, haggling between state systems, accidental fines. Now, add to that list the “orphan exit.”

You probably know you should read your bills carefully every month looking for signs of fraud or overcharging by retailers. But if you're like most people, you probably don't do it anyway. Fortunately, Pennsylvania driver Kathy Suntato is that special consumer who keeps her magnifying glass nearby when scanning her bills.

Once each week, Suntato gets on the Pennsylvania Turnpike at Philadelphia and gets off at Willow Grove, about 20 miles up the road. Under the turnpike’s toll scheme, that should cost her 75 cents. But seven times in recent weeks, Suntato was charged $5 instead. The reason: "orphan exits." Never heard of them? If you drive on a highway that collects tolls electronically, you'd better get to know the term.

Suntato, like millions of drivers around the country, keeps her E-ZPass box with the radio-enabled computer chip attached to her windshield. Every time she enters or exits the highway, a Pennsylvania Turnpike Authority computer makes note of it, and deducts the toll from a prepaid account that's replenished regularly by charges against Suntato's credit card.

Privacy advocates have long warned of the dangers of a system that knows where drivers are coming and going, but consumers have embraced the E-ZPass system because it lets them speed past traffic jams at toll plazas. In some states, including New Jersey, E-ZPass users even get a discount.

Extra charge

But Suntato isn't getting a discount; in fact, she's paying extra. Toll fees on the Pennsylvania Turnpike are based on distance -- the farther you drive, the more you pay. But what happens when the system doesn't know how far you drove because the computers don’t know where you entered the highway?

In Pennsylvania, you pay a $5 “orphan exit” charge.

"We modeled it after the ticket system, where if you lose a ticket, you pay the full fare," said Tom Cohick, a customer service representative with the turnpike authority. Full fare on the nearly 500-mile highway is more than $20, so the agency figures it's being fair by charging only $5.

Suntato isn't so sure about that. Seven times in recent weeks her car was not registered entering the highway, but was recorded as it left. The mistake has occurred at the same highway entrance every time, with both her cars and two different E-ZPass gadgets.

"(This is) another way E-ZPass is ripping off consumers," she said. "They make more money when they don’t read the tag. ... It seems clear to me they have equipment problems and are not correcting them, because hey, it’s easier and more profitable to just charge five dollars."

Orphan entrants, too

What really steams the 52-year-old from Yardley, Penn., is that most consumers never receive paper statements from the E-ZPass system because they cost extra. Drivers must look online to see the tolls they are paying. As we've already said, few consumers are likely to take the time to study every toll charge and spot the problem.

"What about all the people who are trusting them to do their job correctly and are being ripped off?” Suntato said.

Cohick and turnpike authority spokesman Bill Capone say orphan exiting is not a revenue-producing trick. In fact, they note, the computers also register “orphan entrants” -- the system knows when the car got on, but not when it got off. Those people drive for free.

There are plenty of possible reasons for the errors, Capone said. Among them: low batteries in the E-ZPass car gadget; drivers who wave the device in front of their windshield rather than leave them on the windshield in the car; and, of course, the occasional system glitch.

Orphans are rare, but perhaps not as rare as you'd think. Cohick said about 1 percent of total transactions are orphans, but systemwide they tend to balance each other out.

That's no help if you are on the wrong side of the equation, like Suntato -- who might now be the state's biggest advocate of watching E-ZPass tolls carefully. But are the problems enough to make her revert to the old cash system? That's just not practical, she said, because there are now so few human cash toll takers on the job that toll-booth traffic jams are even worse.

"It would cost me at least a half-hour every time," she said.

Ultimately, Suntato was out only about $35, which the state is now refunding, but not before she was told to fill out a state form seven times -- once for each overcharge. To get help finding the form, she had to call the state’s customer service agency during regular business hours, since the office is closed on nights and weekends. Those hassles make it likely most drivers end up just paying the full amount, Suntato figures -- leading to a phantom toll increase.

Easier to raise taxes

The problem of E-ZPass toll creep isn't isolated to Pennsylvania, or to orphans, however.

A recent study published by Amy Finkelstein (PDF), an economics professor at the Massachusetts Institute of Technology, says that states with implement electronic toll collection ultimately raise tolls more than states where drivers pay cash.

Finkelstein studied toll taking in all 31 states that make drivers pay. About two-thirds of those states have at least some electronic toll booths. In her paper, she provides evidence that e-toll states raise their prices 20 to 40 percent higher than they would have without electronic toll collection. And remember, E-tolls are supposed to reduce labor costs, as fewer toll-takers must be hired.

The conclusion makes sense, because consumers are always willing to pay more for things when they don't pay right away. Credit card companies figured this out long ago. And automated deductions make overcharging much easier. It's easy to see what a great tax-collecting tool that could be!

The E-ZPass system also has had other shortcomings.

No judge, no jury

In Baltimore, NBC affiliate WBAL-TV recently reported that drivers who appeal E-ZPass violations must fight a steep uphill battle. A former E-ZPass worker told the station that customer service workers are trained to reject appeals, and do so 90 percent of the time. Many drivers don’t even receive a letter of explanation, the station said.

State officials told WBAL there are 1,000 E-ZPass appeals each month 70 percent of them are denied. The state collects $6 million in revenue for violations each year. A judge and jury are nowhere to be found.

Increased private operation of toll roads also looms as another source of potential problems. A cross-border skirmish broke out early this year between Indiana and Illinois, with the international consortium Cintra-Macquarie, headquartered in Spain, at the center of the controversy. Cintra-Macquarie runs Indiana's new toll road near the northern border. Indiana drivers in Illinois currently get a discount for using electronic toll booths; but the Spanish company did not plan to extend a similar discount for Illinois drivers on its road in Indiana. In retribution, Illinois considered raising the price of driving on Illinois roads....but only for Indiana drivers. Cooler heads eventually prevailed. For now.

All this means that drivers shouldn’t assume anyone with direct access to their bank account or credit card – a company or a government agency -- won’t make mistakes or intentionally inflate charges. Electronic toll collection users should examine their accounts for orphans and other overcharges with the same verve as they hit the gas pedal while flying by those lines at the cash tool booths.

© 2007 :

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