CTA Tattler

I hate overdrafts as much as the next person, and this totally does suck for whoever it happened to, but whatever happened to, "Your checking account, your responsibility?" If you pay for something and it doesn't show up in your statement, you should be asking about it and know that it will be coming out. I don't see how an overdraft in this instance is solely this company's fault.

Well, obviously overdrafts and delayed billing suck, but -- nicely done, CTA, not only discovering the problem via internal auditing (so maybe they're not so hopelessly inept at managing money as we all say) but proactively going out and demanding that their vendor handle the mistake so that CTA customers don't have to suffer from bank charges (which are all so routinely overzealous now -- man, would I be pissed if I got a $50 overdraft fee for a $20 transit card charge that was so long ago I gave up on it going through). That's nice work on two fronts -- good stewardship of the taxpayers' money and good customer service.

Well, relatively few people walk around with their checking account register, recording each transaction as it happens. They use the debit card more like a credit card than as if they're writing a check. And with generally accurate online information, reconciling once a day (especially if more than one person is using the account) is more typical.

(Rememeber the BofA advertisements about how charges appear almost instantly with the guy refreshing the page on his laptop to see the muffin purchase appear in near-real-time?)

But is it solely the company's fault? No. But let's also not forget that it's their responsiblity to promptly report transactions. They're not living up to their agreement with their processor by not doing so.

While banks might not have a lot of incentive to cater to a debit card user who can so easily become overdrafted, credit card users who charge a lot, and don't ever fall into default may be surprised at how quickly their bank will reverse the charge based solely on a significant delay in posting. So Metavante already has a significant exposure for not promptly processing transactions as per their agreements.

In other words, they may have to eat any of those transactions that are challenged, so offering to pay overdraft fees on a handful of transactions not only is a gesture of goodwill, but that goodwill gesture may get them enough positive press that not only will people be expecting to see long-forgotten charges on their statements, but will keep people from challenging these stale postings.

I know that everyone is expecting me to blame the CTA, but I'll have to commend them instead.

First, that they actually caught the error. That just blows my mind and wow. good job.

Second that they actually made the vendor do the right thing...again, good job.

Third, that they would actually do something like this without people complaining, well wowsers again, good job.

With that, I think I've reached the number of times I'm actually allowed by law to compliment the CTA.

But, hey, January is right around the corner ;)

KevinB

[I know that everyone is expecting me to blame the CTA, but I'll have to commend them instead.]

Well played, sir.

Perhaps I am living in some alternate universe here. But right now I am going to do so something that I never thought could possibly occur. I am going to point out how utterly naive Kevin B. is to praise the CTA for this. And Sabrina as well. What on earth are you guys doing complimenting the CTA for "catching the error". This involved millions of dollers of payments that were never charged and in which THE CTA NEVER RECEIVED. But they had been authorised and there was the ridership numbers that went with this authorisization. They had better have caught it. They would have been COMPLETELY incompetent had they not. In fact, one could make the argument that they were incompetent to have not caught it for several months. It is not rocket science to realize that something is wrong, especially in 2008 when so many computerized systems should be able to automatically detect a discrepency such as this. Also, I think it is pretty misleading for the CTA to blame an outside company for this, even if they were the ones who made the mistake. The CTA is responsible for how it runs its operations. If they outsource certain functions, they need to take basic steps to insure that no major mistakes are being made. Especially when they involve revenue. I find it unconscianable that simple steps were not taken to just test out the machines after they were installed to make sure they worked the way they were supposed to. All they had to do was something as simple as giving the workers who installed it a credit card, have them use it, and make sure it was charged accordingly. It would be one thing if there was some sort of flaw which made the machines defective at a certain time. But this occured because they were not set properly, and the problem existed from the time they were installed. When it involves something so important, the CTA should not just assume that the outside company is doing everything correctly. They should test them out for themselves or, at minimum, make absolutely sure that the company has done so. And they also could have delayed these bills for another week or so to allow customers to make adjustments to their accounts so that overdraft fees do not occur.

It is nice that Kevin B. has actually shown he is able to occasionally state something about the CTA that is not a silly rant and that he is capable of more than whining. Unfortunetely, he has chosen this. Nearly all of his rants were completely wrong, or at least exaggerated, on the facts. Yet the one time he praises the CTA it is something that they actually deserve to be majorily critisized for.

Well, I can't win.

I'll admit that I'm assuming that they will actually get the money that they are now charging the customers possibly causing the overdrafts and charges.

Firstly the old CTA wouldn't even have admitted that there was a problem, let alone publicized it.

Secondly, the fact that they even cared that it might cause problems for the people involved.

Thirdly they actually held a vendor responsible for the snafu and made then pony up for the error.

KevinB

By the way, Kevin O., you seem to be incorect that this was a press release. It is not in that section of the website. And it looks as if none of the media organizations have reported it despite the fact that it has been on the front section of the website since around Friday. This is not surprising considering that they generally don't like to get off their butts and actually look for stories and instead expect to be handed everything via a press release. Even though the Tribune has not one but two transportation reporters and the Sun-Times has one they don't consider taking a few seconds out of their lives to check the CTA's website to see if there is anything there to be part of their job. The media reports just about every press release the CTA sends, usually word for word. They usually report any reroutes and delays that the CTA sends out in press releases but never puts them in context. If there is more than one release and they are connected (such as the weekend where there were reroutes on both the red line downtown and the elevated loop tracks on Wabash and Lake) they always simply report them seperately, just like the release. So it has come to be expected that they would not report something like this if there has been no press release. It was a smart move by the CTA to not issue one. Thank you for reporting it and being the first to do so.

Kevin O wasn't the first--I know I heard about this over the weekend, so it must have been on WBEZ.

No KevinB, don't listen! You did good! Stay here in the light!

MK, I think you're wrong on almost all counts. First, it's clear that the CTA had procedures in place to detect these discrepancies. We know this, because they detected the discrepancy. Unless you're an accountant or know a lot about accounting, your speculation as to whether or not it *should* have been caught is just that - speculation.

(Any people with actual expertise in this area out there, by the way? Was the CTA in fact negligent not to detect this error sooner, or is this a typical manner in which to handle these problems?)

Secondly, I think this is, in your words, naive:

[All they had to do was something as simple as giving the workers who installed it a credit card, have them use it, and make sure it was charged accordingly.]

You may not know this, but credit card charges usually take a few days to post to the cardholder's account. So they could have done these tests as you say, but it would have involved keeping the machines out of use for a few days after being installed.

And besides that, it's irrelevant. I recently worked for a software company and one of my duties was credit card testing. The only real test of the machine is to connect connectivity to the credit card server. Once that is established, it's merely a matter of the processor actually doing the processing.

In other words, despite what you may think from the press release, this was not a problem with the farecard machines. It was a problem on the back end, with the processor.

Which is also why I think you're incorrect to say this:

[Also, I think it is pretty misleading for the CTA to blame an outside company for this, even if they were the ones who made the mistake. The CTA is responsible for how it runs its operations.]

Of course, they are responsible for how it runs its operations, which is why they're holding the vendor accountable. They had a deal in place for Metavante to process these transactions, and Metavante f'ed it up. What exactly is there for the CTA to be blamed for here?

If they should have caught the error sooner, that's one thing, but it doesn't make it *their* error. They're not in the business of processing credit card transactions!

I guess the question that MK's post raises for me is: what did the CTA lose by identifying the error in the span of a couple months rather than in whatever timeframe MK thinks it "should" have identified the error.

Certainly there is a time value to money. If I owe you $1M and offer to give it to you either today or three months from now, you'd choose today, if nothing else in order to collect interest on it for three months.

But interest rates are very low, and we're talking about a period of a couple months. I'm sure the CTA could set up a system to detect problems like this in, say, one month. But presumably that would entail extra ongoing costs too (more accounting staff hours, if nothing else). Is there any reason to think that the extra cost of checking for errors more frequently would actually save enough money to make it a worthwhile proposition for the CTA?

Also, on the topic of these silly machines, what's up with not being able to buy a 30-day pass from them? The CTA says it would be more expensive to stock the machines with "different types of cards." This suggests that we would be powerless to figure out what kind of cards we have in our possession unless they are colored red and labeled "30 day pass" in big letters? Does the CTA really think we're that transit pass-challenged?

[This suggests that we would be powerless to figure out what kind of cards we have in our possession unless they are colored red and labeled "30 day pass" in big letters? Does the CTA really think we're that transit pass-challenged?]

This is a good point. Chicago Cards aren't labeled, and people seem to get by OK.

===In other words, despite what you may think from the press release, this was not a problem with the farecard machines. It was a problem on the back end, with the processor.===

Not necessarily.

While approvals are obtained in real-time, processing actually takes place in batches. When the machine goes through it's end-of-day close-out, one of the things it should be doing is sorting and sending credit and debit card transactions to the processor.

An error in the end-of-day processing could cause a batch to not get sent. Most point of purchase systems won't send subsequent batches without sending any queued-up batches, but that's up to whoever designed the software for the machine. It's entirely possible that previous unsent batches could be left sitting, while new batches continue to go through.

Thus a couple months down the line when an auditor notices a discrepency in daily deposits from the credit card companies versus the amounts that were approved for processing, someone has to go in search of those lost batches.

It's highly unlikely that the problem would be with the processors. They have loss prevention people who are looking for pennies. (Think "Office Space".) But they're not looking to see how many approved transactions are never posted. They just automatically unblock the funds after a set number of days if the transaction isn't batch posted later.

The problem almost certainly was with the proprietary software that runs the machines. There's virtually no other point of failure that wouldn't have been caught sooner.

As for patting people on the back for finding the problem, it's great to hear that someone is doing their job. But I wouldn't expect any less. While this is an event that shows why any business should have people reconciling and auditing cashflow, and they did something successful, this isn't some exceptional event. This is business as usual.

I think a key component to this snafu is that the machines in question were new, so there wasn't a past history of transactions to help sniff out what the "normal" amount of activity for these should have been - maybe some budget estimates, but that's it.

I.e., if you know you normally generate $10K a month from credit card machines and all of a sudden the monthly revenue falls to $2K, red flags should go up. But if you have no past experience and the monthly revenue comes in at $2K even though $10K was charged by customers, it's going to take a bit longer to sniff that out.

Also, according to the CTA, only transactions from the machines were not processed in a timely fashion (or maybe it was of the transactions from of the machines; it's hard to tell). The note from the CTA says that 3.5% of all fare transactions were affected. I'd be curious to know the actual number and dollars involved.

I've still only seen one of these machines so far - at Clark & Lake - but it's on the south side of Lake as opposed to the north side where I normally enter (I had to ask one day while waiting for a new Chicago Card Plus).

[It's highly unlikely that the problem would be with the processors.... The problem almost certainly was with the proprietary software that runs the machines.]

Uh, Rusty, I respect the knowledge that you bring to discussions here. But this statement is simply wrong on its face.

Who do you think Metavante are? They're a financial services company (i.e., the processors). They don't design the sofware that runs the kiosks - that was done by Cubic Transportation Systems.

MK - one other thing you may not have thought of... What's the "float" of credit on cards that exists on all CTA farecards? How long does it take us riders to do a full turnover? I don't even want to guess at those numbers, but I cannot see how the fares purchased at these machines over that time period are significant in this context. It's a non-trivial accounting problem to have an expected set of metrics for each card type & fare addition location.

I do think it's interesting how we never hear about the massive loan we all give to the CTA. at 0% interest too.

Hello there,
I'm working on a story about the CTA issue. The reason we've published nothing yet, as at least one of you noted, is because of delays in response from CTA. We hope to publish tomorrow. If anyone would like to comment--particularly if you've been affected by the issue--please e-mail me at mlpatterson@tribune.com. Thanks.

Sincerely,
Melissa Patterson

"You may not know this, but credit card charges usually take a few days to post to the cardholder's account. So they could have done these tests as you say, but it would have involved keeping the machines out of use for a few days after being installed. "

That seems like a logical thing to do. That makes more sense than to have them not work correctly for several months and then have to deal with angry customers complaining about being billed late and overdraft charges (and having to fork over some money to pay for them). And if it really would be to much trouble for them to keep the machines out of service they could still at least test them. Again, this is a simple matter of making sure a credit card gets billed. I don't understand the argument that it is a difficult thing to do. If there were only a few days of the machines not billing credit cards, instead of several months, that would definetely be better.

"And besides that, it's irrelevant. I recently worked for a software company and one of my duties was credit card testing. The only real test of the machine is to connect connectivity to the credit card server. Once that is established, it's merely a matter of the processor actually doing the processing.

In other words, despite what you may think from the press release, this was not a problem with the farecard machines. It was a problem on the back end, with the processor."

I don't understand your argument. This was a problem with the machines being set correctly, according to the CTA's alert. And like I said, there is at least on common sense simple test that could have been done
to make sure they were working. Whether the issue was at the front end or the back end doesn't make a difference.

Hello again,
Just wanted to clear something up: The CTA did respond to the Tribune. They gave us the information about the vending machine issue on Friday. We're still planning to publish tomorrow, as it stands now.

Sincerely,
Melissa Patterson
Chicago Tribune

MK-- the work I do for a living is something that no one ever notices until something goes horribly wrong, which I imagine is not entirely unlike internal financial auditing. (Much like how no one notices how hard ComEd works to keep your lights on, until the lights go out.) So I sympathize, and I don't actually think it's "naive" at all to praise someone for doing their job right, especially if what they normally do is go completely unnoticed. Go, Team Auditor!

[This was a problem with the machines being set correctly, according to the CTA's alert.]

Just for clarity's sake, here's the exact wording of the alert:

"It appears approximately 42 of the vending machines were not correctly activated by Metavante, the company hired by CTA to process the transactions.

This does not necessarily mean that there was a problem with the physical machines - it refers to a problem on the back end.

And what that means is that the machines worked as designed. As it happens, Metavante screwed up the account setup, but that is a seperate issue. And that's on them, not the CTA, which is why Metavante is on the hook for customer inconvenience.

That's all I'm saying. I have no real opinion on whether the CTA caught it quick enough or not. As I said above, I'd like it if someone with actual experience in this area chimed in.

And the Tribune has run their story, with a twist.

http://tinyurl.com/6x8sks

The overcharges are new news to me. Not surprised that the CTA didn't include that in their customer notice, given the 400 people involved vs. the 35,000 with the delayed charges.

The article struck me as sort of an anti-CTA hatchet job, almost an analogue to the "if it bleeds, it leads" mindset of local TV news.

"The article struck me as sort of an anti-CTA hatchet job, almost an analogue to the "if it bleeds, it leads" mindset of local TV news."

Well, the headline is a little misleading but I think the article itself is perfectly fine. It doesn't seem like an "anti-CTA hatchet job" to me. It is balanced and does not at all go out of its way to make it seem like this is more serious than it is. It even specifically mentions that "most customers were only inconvenienced by the change". I can be very critical of the Tribune (mostly of Jon Hilkevtich, who I think is probably the worst reporter in the city), but I have no complaints about this article.