MEASURES TO MINIMIZE FARE EVASION

Report to/Rapport au:

Transportation Committee/Comité des transports

November 22, 2004/le 22 novembre 2004

Submitted by/Soumis par: R.T. Leclair,

Deputy City Manager/Directrice municipale adjointe,

Public Works and Services/Services et Travaux publics

Contact/Personne-ressource: G. Diamond, Director/Directeur,

Transit Services/Service du transport en commun

842-3636 ext. 2271, gordon.diamond@transpo.ottawa.on.ca

SUBJECT:     MEASURES TO MINIMIZE FARE EVASION

OBJET:          MESURES VISANT À EMPÊCHER LE NON-PAIEMENT DU TARIF

REPORT RECOMMENDATION

That the Transportation Committee receive this report for information.

RECOMMANDATION DU RAPPORT

Que le Comité des transports prenne connaissance du présent rapport à titre d’information.

BACKGROUND

At its meeting of April 21, 2004 Transportation Committee requested a report on transit fare fraud and the smart card program by the end of the year.  This report responds to that request.

At its meeting on April 16, 1997, the former Transit Commission approved electronic smartcard fare system as the future direction when the technology had matured and costs reduced to the point at which a positive business case could be demonstrated.

DISCUSSION

Fare System

Fares can be paid using cash, tickets, monthly passes and day passes.  Annual student passes are also available as well as employer-administered EcoPasses, which are bus passes valid for an indeterminate period paid for by payroll deduction.  Current OC Transpo fares are shown in Exhibit 1. 

OC Transpo operates four Sales and Information Centres, which distribute photo IDs, sell passes and tickets and provide information.  In addition, tickets, day passes and monthly passes are sold at more than 300 vendors across the city.

The on-bus transit fare collection equipment consists of a simple farebox that accepts cash and tickets and an electronic transfer-issuing machine.  On all buses, customers using cash, tickets, transfers or day passes must enter by the front door and pay their fare or show their transfer or day pass.  On standard 40-foot buses (680 of OC Transpo’s fleet), customers using monthly and annual passes must also enter through the front door and show the operator their pass.  On articulated buses (240 of OC Transpo’s fleet), monthly and annual pass holders may use any door and all passengers paying with cash or tickets are given a transfer by the operator to act as their Proof of Payment (POP).

On the O-Train it is not possible to accept paper tickets.  Therefore, ticket-dispensing machines are installed on O-Train platforms from which $2 tickets can be purchased.  All O-Train customers without a valid pass or transfer must purchase a ticket.

Proof of Payment System

Business Case

Currently, OC Transpo operates seven routes and the O-Train on a Proof of Payment (POP) basis.  The Proof of Payment (POP) system was introduced in 1983 and, because it allows passengers with bus passes to use the middle and rear doors of the articulated buses, speeds up boardings and makes it possible to substitute articulated buses for standard buses on a two for three basis.  On route 95, for example, without the POP fare system, the additional time needed for passengers to board by the front door, would require the purchase and use of at least two more buses: a cost of $1.5 million in capital and adding $700,000 per year in operating costs. 

The elimination of the POP system would seriously compromise the afternoon operations along Slater and Albert streets. The increased dwell times would not only affect articulated buses but all buses travelling through these corridors.  A recent study of Slater Street operations by Dillon Consultants concluded that minimizing dwell times is most important in achieving improved travel times.  Staff recently redesigned the service through the Slater corridor to reduce the afternoon peak hour bus flow from 205 to 180 buses.  This, along with a number of other smaller changes has resulted in a significant improvement in travel time.  Any increase in dwell times from forcing all passengers to board through the front door would reverse some or all of these gains, resulting in additional travel times, increased costs and a lower level of service for customers.

The total savings in capital and annual operating costs currently enjoyed by the City through the POP program are $3.75 million and $1.8million, respectively.

Although it is necessary for customers to have proof of a valid fare at all times on the seven POP routes, operators have discretion about when to allow rear-door boarding and are encouraged to use their discretion to reduce the possibility of fraud when it does not compromise the operation.  Therefore, operators may choose not to open the rear doors when serving a stop at which only a few people wish to board.

Fare Inspection Program

Use of an honour fare Proof of Payment system depends on an effective fare inspection program.  Customers must be aware that if they do not pay a fare, they may be subject to a fine.  A successful fare inspection program would not result in a large number of fines; on the contrary, the result would be very few fines indeed with a highly visible level of fare inspection.

Approximately 51 million of the 123 million annual passenger-boardings are on POP routes.  These boardings represent revenues of approximately $43.2 million.  A fraud rate of 1% would mean a loss in revenue of $430,000.

Fare inspection is carried out through the use of Transit Law Enforcement Officers (TLEOs).  These are security staff who, in addition to providing broad security assistance to customers and staff, also check fares.  The TLEOs operate in teams of two to perform Walk and Ride patrols.  These teams combine security patrols through Transitway stations and other transit facilities with on-bus fare inspection.

There are currently six Walk and Ride teams.  They cover service on POP routes and the O-Train in a random fashion, placing priority on times of day and locations identified through ongoing monitoring and service control activities.

Customers are required to show their valid fare instrument to OC Transpo staff when requested.  The Walk and Ride teams board buses and trains, checking that all customers have a valid pass, transfer or O-Train ticket.

There is a range of reasons why a fare is invalid.  In some cases the customer has failed to write his photo ID numbers on his monthly pass voucher.  Although this could be interpreted as fraud, it is often most likely an honest mistake and the TLEO would issue a verbal warning.  At the other extreme, there are customers who are using someone else’s bus pass or whose pass is clearly fraudulent.  In this case a Provincial Offence Notice (PON), which carries a fine of $100, is issued.  TLEOs must exercise good judgement between being unreasonable and being lax in their treatment of possible fare fraud.

In the case of the POP routes, fines can only be levied on board buses.  However, in September 2004, the by-law was extended to designate O-Train platforms POP zones.  This was possible because tickets are not accepted on the O-Train and therefore once a customer has passed the O-Train ticket machine it is reasonable to expect them to have a valid fare instrument. Transit Services staff are reviewing the feasibility for limited application of POP zone principles at some Transitway stations.

A check of other transit properties across Canada shows that fines range from a high of $150 in Calgary to $115 in Toronto to a low of $45 in Vancouver. Translink in Vancouver know their fine is too low and are trying to have it increased to $140.  The OC Transpo fine is $100 and staff will continue to monitor the effectiveness of this fine level as a deterrent.

Customer Information

The POP system is supported by a strong customer information program.  All articulated buses have ‘proof of payment’ stickers on the exterior of the vehicle visible to passengers before they board the bus.  As well, articulated buses and the O-Train have signs saying ‘Pay the Fare or Pay the Fine’ prominently displayed inside the vehicle facing the doorwell.  These signs clearly show the $100 amount of the fine.  In addition, information explaining the POP system is provided in the route director boxes on POP routes.

In the case of the O-Train, where the by-law was recently extended so that the platforms could be designated as POP zones, clear signage is displayed at platform entrances and on the platforms.

Other Measures to Ensure the Integrity of the Fare System

Operator Responsibility

While the POP system is a focus of efforts by security staff to minimize fare fraud, transit operators play a key role in ensuring that customers who board by the front door pay their fare on all buses.

The responsibility is underlined in operator training and techniques are suggested that assist operators to check fares effectively.

The internal Fare Committee, which meets on a regular basis, includes members from operating staff.  It reviews all fare instruments and practices.  The committee makes suggestions to improve such things as the design of bus passes and tickets, the layout of transfers, and arrangements with STO on fares.

Design of Fare Instruments

A number of measures have been taken to limit the counterfeit of monthly transit passes and tickets used by OC Transpo.  While both tickets and day passes are serialized and are advertised as being non refundable, monthly passes (over a million are sold each year) contain security features that make counterfeiting and replication difficult.  The following are some security features that have been recently embedded into monthly passes.      

1)      The boxes on the monthly passes, where the photo ID number is written, is larger and more visible.  This also prevents the use of the coloured space of the pass to shape an "Express" + sign adjacent to an "A" or "SE".

2)      The foil on the side of the monthly pass has an irregular edge making it more difficult to copy.  The foil pattern also changes monthly, and for the Annual Student Pass, the foil used is a special proprietary foil from the printer.

3)      The position of "SE+" (express service) is different than the regular pass.  The "SE" on the regular pass is shifted to the right (compared to the Express Pass) making it more difficult for someone to add a "+" sign in order to increase the value to that of an Express Pass.  A similar feature has been applied to Adult passes.

4)      Foil lettering and monthly pass colour has been changed from previous years.

5)      Improved hidden security feature has been added to prevent scanning and photocopying.

6)      In addition to the use of bar coding for pass type and individual serial numbers, the schematics for all of the OC Transpo monthly passes has been organized, and in such a way, as to assist OC Transpo staff to identify lost or stolen passes.

The electronic transfer-issuing machines were installed on all buses in 1998 as a result of a recommendation from the 1997 study on fares.  Prior to this time, transfers were simple in design and prone to fraud.  The transfer printers enabled a much more secure transfer to be produced.  The Fare Committee were given the responsibility of designing the current transfer that directly takes aim at reducing fraud and eliminating fare disputes between customers and operators.  Transfers clearly show the expiry time and date.  As well, the committee introduced a two-letter code that appears in large type in opposite corners and changes each day.  This has proven to be extremely important in reducing the cases of fraud as the code is not known until the day it becomes active. 

Over the past few years a number of changes have been made to the design of tickets to combat counterfeiting.  Since 2002, tickets have been clearly marked as ‘no refund’.  This makes it more difficult for those wanting to commit fraud as they cannot get a refund on stolen tickets.  Serial numbers now appear on all tickets enabling the tracing back to locate where tickets were sold.  Finally, special paper is used that prevents ‘ticket splitting’.  In addition to the design changes, important ‘hidden’ security features have been incorporated enabling staff to identify counterfeit tickets.

Results

The TLEO Walk and Ride teams provide regular reports on their activities from which it is possible to estimate the fraud level on the POP system.  TLEO staff record incidents using the following categories.  Examples of infractions are given for each category.

1)      Verbal warnings: typically issued for not having voucher numbers on passes on the first day of the month or to tourists who are unfamiliar with the POP system.

2)      Written warnings: issued to customers having expired passes or not having numbers on passes beyond the first day of the month.

3)      Provincial Offence Notices (PONs): issued when a customer has no POP and no excuse, has ticket or cash in hand while sitting and/or standing on the bus or when a passenger gets up when seeing the officer and tries to pay the fare.

4)      Turn-abouts: recorded when customers see an officer and clearly change their intention to board the bus.

Whenever a verbal or written warning is issued, the incident is added to a master database.  TLEO officers have access to this information and before any written warning is about to be issued, the database is checked to see if the customer already has received a written warning.  If they have, then a PON is issued instead of a written warning.

In determining the level of fraud on POP services, all incident types are considered except verbal warnings, which are not  recorded as fraudulent incidents.  Over the past year, the fraud rate on POP bus routes based on these statistics was 1.5%, while the fraud rate on the O-Train was 2.1%.  The combined fraud rate on both POP bus routes and the O-Train was 1.6%.  It should be noted that since extending the bylaw in September 2004 to include O-Train station platforms as proof of payment zones, the O-Train fraud rate has dropped to under 1%.

In the last 12 months, 1,268 PONs have been issued by TLEOs on POP routes.

Although it is more difficult to estimate fraud on regular routes, it is certainly less than the POP route fraud rate.  All passengers board through the front doors and the operator is responsible for checking that they pay their fares.  Very few fraudulent passes are found among the 10-20 passes a month that are lost on buses and processed by staff before being sent to the Lost and Found service.  Very few fraudulent passes are confiscated by operators.

Cash and tickets in the farebox are carefully examined in the OC Transpo Treasury, and counterfeit tickets and foreign currency are rarely found.  There is undoubtedly some fraud in cases where customers do not pay their full cash fare, but it is not possible to measure this with any precision.

It is difficult to estimate fare fraud rates with any precision. However, based on the information we have available, the overall level of fraud is between 1 and 2%.  There is little detailed information available on fare fraud from other transit companies.  However, we have obtained the results of fare system audits from Translink in Vancouver and TTC in Toronto.  In Vancouver, the overall fare evasion rate was 3.7%; on bus services the rate was 2.6%; Sky Train was 8.7%; Sea Bus was 8.5% and West Coast Express was 1.6%.  TTC’s audit shows a fare evasion rate for their limited POP system of 2.2%, in comparison with an overall fraud rate of 0.7%.

In both cases, these statistics were the result of systematic audits by plain-clothes personnel.  The Ottawa fare fraud statistics are the result of the ongoing program and recording of offences by uniformed Transit Security Officers.

While the information available in Ottawa on fare fraud is encouraging, and show that fare evasion levels are relatively low, it would be useful to have more information.  In consultation with other properties and the Canadian Urban Transit Association, Transit Services will develop an agreed methodology to further validate fare fraud rates.  This will be important to complement the business case for a smart card fare system discussed below. 

Future Smartcard Fare System

Smartcard technology has matured considerably since the Transit Commission reviewed the subject in 1997 and costs have reduced.  Possibilities for the introduction of a smart card fare system are currently under review by staff and will be presented to Committee early next year.  The system would build upon the SmartBus system that was recently presented to Transportation Committee. The main benefits of such a system would result from the ability to better integrate with STO, which already has a smart fare system and to expand the convenience of programs such as EcoPass to the population at large.

The advent of a smartcard fare system would not obviate the need for a fare inspection program on POP routes.  However, it would reduce fraud rates by making operator checks of the validity of passes and tickets as passengers board the bus more effective.  Customers using cash would be unaffected by smartcards.  However, the introduction of smartcards would have a positive impact on how operators would check passes.  The smartcard reader would automatically verify the validity of the card and this would be confirmed to both customer and operator by audible and visual indicators.  The operator would only have to confirm the picture on the card is that of the person using the card.  Paper tickets would be eliminated and customers would use the stored value portion of their card to pay a fare.  The value of the trip would be deducted from the card and again the audible and visual indicators would confirm that the proper fare was paid.

As the availability of technology to counterfeit fare instruments becomes more widespread, the ability of an electronic system to detect fraudulent fare instruments will become increasingly important.

CONSULTATION/PUBLIC NOTIFICATION

The POP system is the subject of ongoing communications.  There are notices on every articulated bus and O-Train, and in the information panel of the route director boxes on POP routes.  The recent expansion of the program to make O-Train platforms POP zones was communicated through notices, flyers and advertisements.  The subject of POP and fare fraud has been discussed at the Pedestrian and Transit Advisory Committee.  The general consensus of the committee is strong support for the proof of payment system as long as adequate levels of fare inspection accompany the program to serve as a deterrent against fraud.

FINANCIAL IMPLICATIONS

The fare inspection program conducted by TLEOs for POP routes is estimated to be approximately $200,000 annually, which is included in the overall Security budget.  $80 of the $100 PON is returned to the City bringing in approximately $100,000.  This reduces the operating costs of the POP program to $100,000.  The program allows approximately $1.8 million to be saved in operating costs annually by the substitution on a two for three basis of articulated for standard buses, without the need to increase the scheduled running time.

SUPPORTING DOCUMENTATION

Exhibit 1 – OC Transpo Fares

EXHIBIT 1

SUMMARY OF TRANSIT FARES