CREDIT AND BLAME
MTA, Visa argued over a fix while thieves just kept stealin’ millions
THEMTA — and taxpayers — have been scammed out of more than $16 million while the agency and financial giant Visa quibbled over a relatively inexpensive anti-fraud measure.
Everyone looks bad in this tale of the underground where one of the main sports — ripping off the MTA — is constantly evolving.
THE MTA said it has been very aggressive in protecting itself against punks who use stolen or forged credit cards from making purchases at automatic vending machines that sell subway and commuter train passes.
Visa said it quickly responded to an MTA request for help.
Yet, somehow the mta wound up losing a ton of money— although the transit giant and financial giant both considered the loss chump change. Years went by, and each year millions of dollars was pilfered.
A Metropolitan Transportation Authority vendor in 2005 developed software requiring purchasers to input their billing address zip code.
The MTA installed the upgrade in Manhattan subway stations in late 2005 and early 2006 — but nowhere else.
Over the next six years, vending machine fraud increased in subway stations in Brooklyn, Queens, the Bronx and Staten Island and at commuter train stations in the city and beyond.
Credit-card crooks were able to buy batches of tickets and monthly passes, some worth hundreds of dollars each, and sell them at discounted prices to unscrupulous commuters.
“It was an opportunity. . . . The larceny de jour,” one law enforcement official told the Daily News.
Riders who bought the cheap tickets weren’t doing other riders any favors, depriving the MTA of money it could use to improve the transit system.
In 2007, this fraud cost the Long Island Rail Road $624,170, according to MTA data. LIRR’S losses grew annually to nearly $4 million last year.
NYC Transit lost $926,260 in 2007. By last year, the annual pilfering reached $2.1 million — with very little of the subway fraud taking place in Manhattan, the MTA said.
Metro-north was scammed out of $220,000 in 2009, the earliest year for which figures were available. By last year, that figure more than tripled to $700,000.
Last week, the MTA said the 2006 initiative was a pilot program, and expanding it required the approval of the major credit card companies. Visa, one of the biggest, doesn’t generally authorize zip-code verification for vending machines, and until last summerthe MTA couldn’t get Visa to agree.
LIRR completed the work late last year, followed by MetroNorth and NYC Transit.
The MTA plays down the issue. Credit card companies and banks generally don’t consider fraud to be problematic unless it reaches 1% of annual sales revenue, the authority said in a statement. It’s a “standard metric,” the authority said.
The fraud only exceeded 1% at LIRR last year.
“In general, 1% is the threshold used for determining whether a retailer has a fraud issue requiring remediation,” the statement said. “The MTA agencies’ numbers have consistently been well under that threshold because the agencies have all taken a very aggressive approach to fraud prevention.”
Not aggressive enough.