MBTA cracks down on fraud after rising refunds

BOSTON --The MBTA has acknowledged its system of handing out refunds to anyone claiming their bus or train was late is flawed and said it's begun a crackdown after uncovering several incidents of fraud.

The Massachusetts Bay Transportation Authority said it's returned more than $4 million to passengers under the on time guarantee program since it debuted in February 2001. The program allows riders to seek full refunds if service is more than 30 minutes late.

MBTA general manager Daniel Grabauskas said the program didn't monitor for fraud closely enough and paid claims for trains that were not late.

To claim a refund, passengers needed to submit their name, home address, e-mail address, and the date and time of the late train. No proof of ridership was required and the MBTA rarely checked, before the recent crackdown.

Officials said the refund system was so open to abuse that local college students filled out forms fraudulently for "beer money."

"We have not been vigilant enough in monitoring fraud in the program," Grabauskas said. "I think it's an important program to continue, to show good faith to our customers, but it's not going to be a giveaway."

One Methuen man who made 73 refund requests returned $605 in refunds after being confronted by transit police, the MBTA said. The man had another 103 requests seeking $875 in refunds pending. He wasn't charged because he returned the money.

In another case, a Malden legal secretary used two post office boxes in Plymouth to file claims in the name of her mother, dead stepfather, and nieces, nephews, and grandchildren, officials said. When police interviewed the woman, who also wasn't charged, police said she had $538 in approved refund slips and $2,932 in pending claim forms.

Since it stepped up refund investigations in January, the MBTA has rejected about a quarter of the $48,531 in claims it handled.

The cash-poor MBTA initiated the crackdown in part to control a huge jump in the refunds, which rose from about $390,000 in 2001 to more than $1.3 million last year.

The MBTA is planning a fare increase in January, the second in three years, and is being forced to pull nearly $5 million from its reserve funds to balance the budget.

"It is no secret that the MBTA is having financial difficulties, but what I do not want to do is have people that are cheating the system drive up the cost of that program to the point where I won't be able to afford it," Grabauskas said.