The MBTA has ripped me off to the tune of $6.00. I can certainly afford the loss, but many of those who depend on the T can’t. And, quite frankly, it was not so long ago that Massachusetts came down hard — correctly — on retailers who did the similar shenanigans with gift cards.
How many of you knew that:
1. Charlie cards expire
2. There is no expiration date printed on the card
3. There is no notification when the card is about to expire
4. The process for recovering money on an expired card seems designed to make it effectively impossible.
Here’s my experience. I’ve kept a Charlie Card in my wallet for as long as they’ve existed. I generally “charge” it up to about $20, and refresh it at the machines (in every stop) when it’s empty. On my last trip, when I attempted to use it (at the Arlington stop on the Green Line), the gate made it’s “Sorry Charlie” noise. Assuming that it had again run out of money, I attempted to add another $20. The machine notified me that it was expired.
Fortunately, an attendant was nearby. She immediately handed me a new card, and was very helpful. I asked her when it expired, and she used a special code (available only to T employees) to unlock the machine so that it could display information about my old card. It is, in fact, expired — and has six dollars and change on it.
Here is what the CharlieCard Expiration FAQ says about recovering the value from an expired Charlie Card:
Stored value can be transferred at the CharlieCard Store located adjacent to the Red and Orange Lines in Downtown Crossing, Monday through Friday, 8:00 a.m. to 5:30 p.m. Expired Senior CharlieCards and TAP CharlieCards can also be renewed at the CharlieCard Store. Cards can also be mailed to:
MBTA
Revenue Department
10 Park Plaza Rm 4730
Boston Ma, 02116Stored Value on cards mailed in will be transferred to a new card. There are no cash refunds.
I’m sorry, but this is horse manure. It should be possible to recover value from expired cards at every machine. I am NEVER at Downtown Crossing, and certainly not during hours the “CharlieCard Store” is open. The expiration date should be printed on each card. When I add value to a card whose expiration is imminent (a few weeks, for example), then the machine should warn me that the card is about to expire.
If a private retailer did this, I think the AG would stop it.
This is the kind of thing that builds political support for killing the MBTA.
I’d like to know how much money the MBTA collects each year from the value of unexpired cards that are not claimed by riders.
I agree with the vast majority of s’tom’s post, though not with Bob Neer’s glib and evidence-free promotional comment. The expiration game is a terrible practice, it seems willfully difficult, and we don’t tolerate this nonsense from private retailers.
One “good” reason for the expiration: tourists. When friends or family come visit, depending on circumstance, they end up with their own Charlie Card with $10 on it or somesuch. They use it their last time to get to the airport, and inevitably it has some money on it. Maybe they’ll remember their Charlie Card next time they come to Boston; maybe it ends up in the junk drawer for 25 years. The answer to S’tom’s question blends those who (willingfully) let their cards expire with folks like S’tom.
The T can’t keep the liability of those cards on the T’s books indefinitely — it grows and grows, and that results in lots of accounting problems. The T could “ding” the Charlie Card $1 every month of no activity, but that would suck big time for locals who don’t use the T every month but value the Charlie Card convenience. So, making the cards expire is the logical choice.
The problem is not that the cards expire — it’s that it’s extremely difficult to transfer money from an expired card to a new one. The T should have made this extremely easy.
1. Put the expiration date on the card
2. Make every station a “expiration value transfer” station
3. For places where lots of tourists depart our city (airport, South Station, North Station), make a big freaking sign reminding folks to get their unused fare back, in the form of cash. As much as I’d like the T to have the money, fair is fair for affairs of fare.
I agree with you about the accounting issues, and about the difficulty of handling tourists. I may even edit the thread-starter to clarify that last sentence.
I’d like to see an annual report from the T showing the current balance of all expired cards. That strikes me as quite similar to the Unclaimed Property Information maintained by the state for unclaimed bank accounts:
It seems like what’s happening at the moment is that the “unclaimed value” of expired Charlie cards is accumulating without limit. I’d like that to at least be reported.
but I imagine the T classifies the revenues from the sale of Charley cards at the time of receipt from their being purchased. To accrue and adjust the balance of the outstanding unused amounts would mean they know which fares have been paid for by using these cards and the accounting would be nightmarish. Perhaps they do have access to those numbers, but I still think they handle the accounting for Charley Cards on a cash basis rather than on an accrual basis – but look at my title again – Just a guess.
Indeed.
So what you seem to be saying is that the T has no way to account for the value of the unused cards. I suppose it’s safe to say that it will always be larger than the amount that could ever be disbursed to those who manage to get to their CharlieCard store with expired cards.
I get what you’re saying. It appears that the practical impact is to hide a balance that will grow without limit.
What I’m “guessing” is that they declare the revenue when it’s received and don’t keep a running balance in a liability account. They do their accounting for budgeting and reporting purposes, not for filing taxes as would a business. The balance wouldn’t actually “grow” because there is no account defined in which the unused amount would have a balance. Clearly this is not the most accurate way of accounting for this type of transaction, but I wager that’s how they do it. Maybe someone in public sector accounting can clarify for us.
Seems like it starts as a liability. The MBTA has the cash (kept somewhere, hopefully in a way that allows it to be counted and reported). It also has a liability, because it has to provide service to the card-bearer.
This seems like the companies I’ve worked for where we sign a contract to develop and deliver a product and receive an up-front payment. In those settings, we put the cash in one account. It did not, however, count as “revenue”. As the development progressed, we were required to estimate (using project management tools) the percentage of the total work that was completed. That percentage was the amount of the customer payment that we were allowed to recognize and report as “revenue” (and spend).
I wasn’t involved with the accounting side of that company, but I’m pretty sure we had a liability account that balanced the cash account holding the unrecognized revenue.
If there is no expiration date, then the quantity that grows is, I think, the liability account. Qualitatively, suppose that one of every ten CharlieCards that are “charged” are done so by tourists who use some of it and then leave the region with a card holding, say, 50% of its original balance. The sum total of those unused balances is, I think, sitting in the cash account and also in that liability account. Since the number of CharlieCard-holding tourists continues to climb, and since the cards don’t expire, then the balance of the liability account (and the cash account that matches it) grows without bounds.
The CharlieCard, however, HAS an expiration date. If it were a “hard” expiration, meaning that the MBTA has no obligation to provide credit or service for the unused balance, then the effect of that expiration is to zero the liability side for that card, while leaving the unused cash balance untouched.
In short, the MBTA receives previously unrecognized revenue from the expiration event, just like an individual receives imputed revenue when a loan is forgiven by the lender.
If nothing else, the MBTA receives interest income from the balance of the unused cash that has accumulated from CharlieCard purchases. The MBTA borrows $20 from me when I charge my CharlieCard for that amount. Whatever yield that $20 generates accrues to the MBTA, rather than me, after that event.
I think the public has a right to know the amount and disposition of these unaccounted for and unreported balances.
The public does have a right to know. In the private sector, as you correctly pointed out, these transactions are done on an accrual basis and that liability account has a balance which can be audited and proven. Over time the difference is moved from the balance sheet to the income statement as a revenue or expense, depending upon the direction of change in the liability. This type of accounting would hold true for any type of pre-recieved revenue. It’s not counted as revenue until used by the payer.
I guess my original point was that I doubt the MBTA takes its accounting to that level, but that is a guess. I’d like to know the reality.
Every retailer that uses gift cards has this problem.
Massachusetts even has a helpful statute giving rules on how to do this.
The cards must be good for at least 7 years. Issuance and expiration date must be clearly marked, and if they aren’t the certificate is good forever. There is a sneaky exception if these dates are printed instead on the sales receipt that no one ever reads.
The accounting isn’t really that hard for a big organization.
We’ve been over this debate many times, but I strongly urge anyone interested to read up on Ventra and get back to me. My fiancee nearly lost $25 bucks on a prepaid card they mailed to her that their machines wouldn’t read, and they refused to let her activate it over the phone. We had to physically go down to their headquarters in -15 weather to get the bloody card reactivated in person. And there were about a hundred other people in front of us in line with the same fucking problem. This was after their out of state customer service was incredibly rude and next to useless over the phone.
Another women didn’t realize these cards were enabled to be tapped with smart chips, and had money drained from her Ventra card simply because it was next to her debit in her wallet. They refused to give it back to her. And it’s being used as a credit card scam for low income people. That’s real privatization. Replacing a perfectly reasonable smart card the CTA developed itself for it’s own system with an overpriced, out of state, shady ass private contractor who had no loyalty or even liability to the public. The city is still waiting to be reimbursed. So no, let’s not do that to the MBTA. Raise the revenue, invest in better technology and management, and continue to expand it to increase ridership. It’s not rocket science.
In case anyone wants to dismiss him since he is a leftist historian, read the Yelp reviews and ask yourself if you want that shoved down your throat in Boston.
It was two years ago now that we were in London, so my memory may not be perfect and things may have changed (for instance, I think they were going to reduce the staffing at the Underground stations), but what I remember:
We got regular Oyster cards instead of the “tourist” type. I don’t remember why, but it made more sense when I looked at the options.
We were able to get cards at our local station. There was a deposit and when we turned in the cards before coming home, we got back both the balance and the deposit.
I believe there was a way to set up an online account tied to one’s card so that you could deal with all sorts of issues: Adding money, reporting a lost card (and deactivating it), transferring money from one card to another, etc. Heck, anything I can do with a Starbucks card, I should be able to do with a Charlie Card (and that includes not carrying the physical card around and using my phone instead. How about a Charlie Card in Passbook?).
Oh yes, what a great idea! Let’s make sure that the T is completely focused on quarterly results. What could go wrong for an organization that already has shown a great willingness to defer maintenance?
N/T
Ours continues to decline under the status quo with no realistic prospect of improvement, and every prospect of continued decline. If one could raise billions through the private markets to improve the mass transit system — as Hong Kong and other places with much better transit systems have done — why wouldn’t one? (Other than ideology-driven extremism?)
The MTR was created from scratch by substantial up front government investment, it was able to become a publicly traded company by selling spurs of real estate along it’s line and due to the explosive growth of the Hong Kong Metro area. It had substantial infrastructure built up front and was designed to be expanded.
Our issues in Massachusetts are structural as much as financial, it is just difficult to put new rail lines down in a densely populated area that has been built out without them. We could’ve followed Chicago and had mass transit lines built into the medians of our major highways like the Chicago Blue Line on the Kennedy and Eisenhower expressways or the Orange line on the Stevenson, we didn’t. We could’ve had the Red Line go into Lexington and even connect with a new regional airport at Hanscom. We didn’t.
This isn’t due to a preference for private management but due to a suburbanized electorate that refuses to invest in public transit. We can’t even pass a gas tax, how can we pass the substantial capital needed to take our system from the pits to the ritz to make it a viably tradable company? MBTA stocks would be junk right now, and any private investor would come in and raise rates and cut costs, as the Commuter Line already has, rather than investing in the future of the system.
MTR is still under quasi public control and is a strictly regulated company. The Euro-American example of privatization shouldn’t be followed. In Chicago it has meant awful vendors like Ventra and parking fees going to Morgan Stanley until 2102 (perhaps future drivers will have flying cars to avoid paying them).
British rail privatization is a disaster and re-nationalizing them is becoming a popular option and a big reason.
I think you view this solution as an underpants gnome proposal, we privatize, suddenly the T’s structural problems and lack of infrastructure development is fixed. It isn’t, a successful privatization can only occur after those investments have been made.
I endorsed the New Balance T station, and feel that the T can and should collaborate with the local private sector which has much to gain from a successful mass transit system. They should be the ones ponying up the added revenue and should be the leaders in getting our political culture to embrace mass transit. I am all aboard those efforts. We can do naming rights, we can have other companies contribute station funding, and the major state employers from Gilette to biotech should get their PACs to back an expanded transit system. Maybe all the goons over at Boston 2024 can regroup and back a legacy project that actually makes Boston more livable and actually helps our economy. I welcome private sector advocates for mass transit, but to argue that privatization is a panacea fails to recognize how structural these problems are and ignores the substantial public investments that need to be made to fix them.
I don’t have time to get the link now, but we’ve already debated this at length on BMG.
There is a very good reason why a leading factor in the current political turmoil roiling the UK is the overwhelming desire of UK residents to re-nationalize passenger rail in the UK.
The UK tried it and it has failed miserably. As jconway observes here, and was at least in my view compellingly demonstrated in our earlier debate, Hong Kong is not remotely comparable to Boston or Massachusetts.
Private companies cannot make money providing passenger rail service. Period.
The MTR does make money, but it made money after a substantial period of sustained public investment, expansion, and public ownership. It may have made sense for the Chinese government to privatize public utilities functions when they were already at a high degree of functionality and usability, and it became a question of management which is far from where we are here. It’s a question of investment, and in the US public investment has always been the historical driver behind railroad growth.
The MTR is successful and profitable despite privatization rather than because of it. The casualty is rather weak here, and it’s an exception rather than a rule as we have pointed out before. Basically it’s an underpants gnome fallacy, he used the MTR and liked it, it’s well rated in the world, and it happens to be privatized er go, that’s the solution for the MBTA-an entirely different system that has been woefully maintained and underfunded with significant challenges the MTR never faced.
…I don’t see the problem with cards never expiring. If anything the T makes an extra few bucks if its never used. The card should be reloadable ad infinitum and available at every station. I also fail to see why privatization is necessary to make it happen or even sufficient. Seems the General Court can just enact legislation providing for no-expiration cards.
I think this is a fine idea, at one level.
Nevertheless, even if it’s nightmarish, it seems to me that the T has an obligation to find a way to report the total amount outstanding on CharlieCards.
Whether the cards expire or not, there is one number which is the total amount the T has loaded onto cards. There is another number that is the total amount that the T has removed from those cards in exchange for rides.
The difference is actual cash that card holders have essentially loaned to the MBTA. If one of those customers walks away and never demands payment of that customer’s balance, it amounts to imputed income for the T.
If I take out a mortgage, stop paying, and the bank decides to forgive the loan, then I owe taxes on the amount forgiven. Somehow the accountants manage to find a way to ensure that those amounts are tracked.
The idea that the MBTA (or any other government entity) can accumulate an unbounded and constantly increasing balance of funds and not even REPORT it strikes me as, well, fraudulent.
If I have $3.40 on a Charlie Card, the MBTA has a liability, on their books right now, of $3.40. It’s a liability because the T has received $3.40 from me more than the value of services that it has provided me. The next time I hop on, their liability drops from $3.40 to $1.30.
If the cards don’t expire, and if people continue to essentially lose the cards (literally lose, bury in a junk drawer, throw away, put in a scrap book, whatever), then the total dollars in liability increases indefinitely. It’s true that not every chicken will come home to roost, but how many will? How can the T budget going forward when they’ve got this liability monkey on their back? How can they balance their books?
They can’t. The T doesn’t “make” bucks when cards are unused… it already has the bucks. When unused, the T can’t shed the liability, and that is the problem — and one good reason to have the cards expire.
(Another is the future inability to read today’s cards, but that’s not a present day problem.)
Note that even with an expiration date, like the current status, the MBTA clearly says that no cash refunds are offered. So their liability is to provide you with $3.40 of service.
So, unless the cards REALLY expire (as in can’t have their value recaptured), then I don’t think the T gains anything by the current policy other than making it less likely that that expired value will ever be used.
I wonder how this is different from retail store gift cards. I’m pretty sure that they are not allowed to expire, and many of them also cannot be reclaimed for cash.
You can read about Mass law regarding gift card expiration here.
If there is no expiration date readily available for a Charlie Card, if it were a gift card, it could not expire under this law.
If the private sector can deal with an long term liability – the MBTA can. Public entities should follow the same laws as private.
Same issue with private companies and record security – private companies release data by accident – they are responsible – not true of public entities.
BTW – speaking of public entities – why is Somerville harassing it’s residents who own cars – I had a family member ticketed in a parking space by Somerville for having an expired inspection sticker – this is an issue for a police officer – not a meter maid.
Public sector entities don’t pay taxes. Their accounting is for budgeting and reporting. They play by different rules because they make the rules.
It’s very simple – the cards should not expire – just as stamps don’t. The MBTA is taking advantage of it’s riders.
The public sector needs to play by the same set of rules – that it enforces on the private sector.
from an accounting standpoint – the MBTA knows what the liability is – post it – times a factor for cards that will never be used.
actually shouldn’t the MBTA – be returning the unused balance to the state ?
My guess is they would have to print some type of a disclaimer that says if x number of months (maybe years) go by without any activity the balance of the card will be handed over to the state?
My advisor told me that they see abandoned accounts all the time. The process starts with counting several undeliverable mail items … followed up with multiple database searches to “find” the share owner. When that fails it stays on the books at the firm for a period of time (I think 2 years) then it’s handed over to the state.
Indeed, your adviser is probably referring to the Unclaimed Property Division I linked to yesterday.
That should have been “Perhaps”, not “Please”.
That’s exactly what I was thinking … can’t believe I missed your link.
Thanks
The other thing I was thinking — the “dollar value” of an obligation to serve a customer seems different than a “dollar value” of an obligation to provide a real good.
In other words, the T is going to operate its streetcars, subways, buses, and ferries whether or not I ride. So, to the extent that they have a bunch of outstanding liability associated with unused rides, so what? It doesn’t change their forward going costs a whit — they’re going to operate those vehicles anyway, and the marginal cost of another rider is as close to $0.00 as can be.
I’m walking back my theory on liability on the books, at least a little bit. The liability would be there, but to the extent that it doesn’t actually cause the MBTA a future dollar expenditure, so what?
Take and declare the revenue for the cards as they are purchased. Net the cost of the rides paid for by the cards into the millions of rides provided in general. I can’t imagine trying to keep an accurate balance in a liability account which would be the net of card revenue against the cost of card-paid rides.
Why not? Every single Charlie Card has a unique ID, stored in the MBTA database. That database also has the value stored on each card. Knowing the total balance of liability is summing a single column — trivial.
How else could they keep track of how much is left on your un-expired card?
In the private sector, with gift cards, the cash registers are set up with revenue codes so that each transaction is posted to different revenue source accounts – cash, credit cards, gift cards etc. Stores know which purchases are made with the gift cards and those purchases are posted against the liability account. Perhaps the MBTA does too. I don’t use a Charley card, they may be pre-loaded like a prepaid credit card and store the balance on the strip. Now I am getting curious and would like to know.
The CharlieCard is, I think, essentially a debit card.
The balance is store in MBTA computers, not actually on the card. As stomv notes, each card has unique ID and the MBTA knows the current balance (as well as the entire transaction history) of that card. If the card is charged using a credit card, then the MBTA can also associate the address on the credit card with that transaction.
Thus, if you use a credit card to add money to your CharlieCard, and subsequently lose the card, the MBTA can issue a new card, transfer the funds, and invalidate the old card (just like a debit card from a bank).
The mechanics are straightforward for gathering whatever information is needed for whatever accounting system is chosen.
If a merchant isn’t required to refund the unused portion of a gift card as cash (they are, but the T is not) then all you get is that sum in “retail value.” If you use your $50 on a shirt, the shirt did not cost them $50, because that isn’t what they paid for the shirt.
I am very skeptical that this is truly a difficult accounting problem, as it is something that is routinely handled by the private sector.
…so I’m not sure what’s reported or needs to be. I think it would just be like any other outstanding obligation. You don’t assume you can use it for something else. When I write a check I deduct that amount from my ledger immediately even though I still have the money until the check is cashed because those funds are already spoken for. It doesn’t sound that difficult to keep track of.
Unlike our checkbook situations, there are regulations on how the bookkeeping has to occur for things like this. I don’t know the exact law either, but would be interested to hear from someone who does.
You have a monthly pass but you also have money on the card. When you tap the card it ignores that it’s a monthly pass and takes the cost of the fare off the money part of the card.
I believe that’s if you accidentally tap your card twice or you tap the card before the new month that you paid for starts.
swipe credit and debit cards for small amounts in many story without a signature the T should accept credit and debit cards for fares. One should not need a Charlie Card if one has a credit or debit card with current technology.
….provide postage paid envelopes to mail the card back for the balance transfer?
And Tom is still five bucks ahead if he Springs for the 49 cents for the stamp.
Last time I checked, you couldn’t put a monthly combo pass on your Charlie Card from one of the electronic terminals. I’d buy the ticket and then go to the Downtown Crossing stop to have them transfer it to the card.
It’s a shame about the normal Charlie Card not having its expiration date displayed. I’ve a TAP card, and the expiration date is clear and in the bottom right corner of the front side.
There was a point in which the MBTA was planning to let users check the stats of their TAP card through their website, but I doubt they ever implemented it.
I was surprised enough when they eventually got to fixing the terminals so you could press the debit button (instead of credit button) to pay by debit.
I’ve had a feeling that the MBTA loses more money every day through bus drivers who are either late or simply impatient waving people through than money lost by customers returning from Boston.
My card has a printed expiration date in June, 2021.
I’ll worry about it in six years.
I’ve already picked up and filled out my Driver’s License renewal form, that’s due in 53 short months.