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Skepticism About CTA's Ventra Card

Dominates State Hearing

By Jon Hilkevitch, Tribune reporter

April 1, 2013

CTA President Forrest Claypool on Monday appeared to alternate between playing the roles of disinterested party and pitchman for the new Ventra transit card’s controversial prepaid debit-account program.

Claypool told state officials at a public legislative committee hearing that no other U.S. transit agency has offered a prepaid debit account to its customers. But he left out why: concerns about assorted fees that are not considered consumer-friendly.

Lawmakers put Claypool on the hot seat for taking the two seemingly incompatible roles during the hearing in Chicago. The hearing was called to discuss the new Ventra fare-payment system, but it focused almost entirely on the financial risks to consumers of signing up for the optional Ventra prepaid debit MasterCard account.

“I kind of hope that (Claypool) would just get rid of the debit feature,’’ state Rep. Deborah Mell, D-Chicago, said after the hearing held by the House Mass Transit Committee, which Mell chairs. But the legislature has “limited, if any” oversight authority to force the CTA to abandon the prepaid debit-card accounts, Mell said.

The CTA so far has provided only sketchy information about Ventra to its customers, even though Claypool said Monday that the new system could launch as soon as early summer, replacing current CTA and Pace transit cards in 2014.

He promoted the MasterCard features as providing a public service to low-income commuters who don’t have bank accounts.

“The power of the card is to liberate them from currency exchanges,’’ Claypool testified before the Mass Transit Committee. He then added a qualifier: “CTA will not be marketing the debit card.’’

State Rep. Al Riley, D-Olympia Fields, said he wasn't satisfied based on Claypool’s testimony that the CTA has taken adequate steps to protect Ventra prepaid debit MasterCard customers, especially low-income commuters, from “egregious card rates.”

Riley later criticized the CTA boss for “skirting a lot of questions.’’ He also said CTA riders want better quality transit services, not a MasterCard offered through the CTA.

“Don’t say this (card) is going to ameliorate all those problems” of low-income people, Riley said after the hearing. “That’s nuts. He’s (Claypool) not going to do that with that card.’’

In a heated exchange with Metra executive director Alex Clifford, Riley also criticized Metra for failing to get on board the new fare-payment system with the CTA and Pace, or even to participate in talks in good faith.

Clifford insisted Metra did participate in talks, but he said a decision had already been made by CTA to go with the Ventra fare-collection system when he joined the commuter railroad.

“You could disagree all you want, but I’m telling you what happened,’’ Riley told Clifford.

One by one, members of the Mass Transit Committee expressed skepticism about the purported consumer benefits of the prepaid debit account, while also raising objections to an array of service charges and convenience fees.

“It's interesting that most of the questions today are about the debit cards when we are in the transit business,” Mell told Claypool.

She said constituents and other people she has heard from are skeptical about the prepaid debit account. Claypool acknowledged that the CTA has “a lot of work to do to explain what Ventra is and isn't.”

Claypool expressed confidence that “people will make good choices’’ to determine whether the Ventra prepaid debit MasterCard is right for their specific financial situation. He said the prepaid debit account is “a 100 percent voluntary choice.’’

Yet minutes later, Claypool sent a mixed signal when he told the committee: “It’s a massive undertaking to educate and bring people along.’’

The Ventra contract for the prepaid debit account guarantees the CTA a minimum of $500,000 a year regardless of whether the debit accounts sell, and potentially much more revenue if large numbers of Ventra customers activate the prepaid debit-account option and start racking up service charges and convenience fees that accompany ATM withdrawals and other activities, as well as “dormancy fee” penalties for not using the Ventra MasterCard often enough.

State Rep. Barbara Flynn Currie, D-Chicago, asked Claypool why the CTA sought bids for a combined transit-debit card instead of only a new transit card to replace the current CTA Chicago Cards and magnetic stripe tickets. Claypool said it wasn’t his decision.

“When I walked into the door the (request for proposals) was (already) on the street,” Claypool said.

Currie then asked CTA revenue director Eric Reese, “Your hands are clean too?”

Reese said that he, unlike Claypool, worked at the CTA before the Emanuel administration took office and that he was involved in the procurement process that led to the $454 million contract for Ventra going to Cubic Transportation Systems Inc. and its subcontractor on the Ventra program, First Data Corp., along with MetaBank, a specialty bank based in Iowa.

Reese said it was the CTA’s plan from the start to link the new transit card to a prepaid debit account, because it was simply “the best option” for quickly expanding usage of the Ventra system overall.

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