A Super Garage ... and a Disaster
January, 2004Before I get into my normal harassment of a parking operator, note that the other day I audited a garage in New York and found no problems. Nothing, nada, zip. They were able to account for every ticket, every card, every transaction, everything. Certainly one of the best-run garages anywhere.
I went in expecting a disaster and came out wagging my tail. I go to great lengths to hide the identities of garages where I find problems. However, if you want to know where this garage is and who runs it, drop an
e-mail to firstname.lastname@example.org.
My boss will fill you in.
I will tell you this -- the procedures used there, the forms and audits, were exactly the same as the ones I saw in similarly run garages 25 years ago. Equipment is important, but so are management practices. If it works, don't fix it.
I was in a famous southeastern city last month, beautiful weather, great for walks in the park, but I digress. I was assisting at an audit of a facility that used debit cards. What a dog's breakfast, no pun intended.
There was going to be an operator change (for reasons that will become apparent). We were there to help the owner and new operator benchmark everything so the turnover would be clean.
The one major issue was debit cards. There were just under 400 cards in the system, with a value of $38,000. Plus, there were accounts with "card deposits" amounting to $31,000; "abandoned" accounts, $7,200; and deposits on abandoned accounts, $3,900. But then I had some questions:
How were the deposits shown in the management statement? (We couldn't tell.) Why was this important? If it was shown as income, it was subject to the local parking tax (25%). So when a refund was made, the owner was out 100% of the money, although he had only 75% of it in his possession. (Many operators are calling the deposit an "administrative activation fee" and are simply keeping it, and the customer owns the card.)
Some operators never show the deposits on the management statement; they simply deposit them to their account. On a changeover, it's like in the military: "Don't ask, don't tell." If the incoming operator does not ask about deposits, the outgoing operator does not tell of the deposits. When a customer asks for his refund, the new operator simply refunds the money and expenses the owner the cost of the refund. The operator doesn't want the owner to know he didn't ask about card deposits.
Note: Debit card systems must be able to track all monies that are added to a card. In the system I audited, one could take in a deposit, place a value on the card, and not show that any money had been collected. This would be particularly easy to do in a cash transaction. These types of systems must be able to summarize daily all the monies that were added to individual cards and track those payments.
Another problem with some of these types of systems is cards in violation. On entry, the card started a timer; on exit, either the card did not read properly or the customer tailgated the car in front. They are now out of the facility and the clock is still running. Fast-forward four days and the customer now owes $140, but has a balance of only $30 or $40 on their card. They come in by pulling a ticket, but they cannot exit. The cashier lets them out because she does not know why the card does not work. A couple of days later, the manager attempts to fix the problem. Now the cardholder owes six to seven days of parking at $35/day, or $210 to $245.
To fix the problem, the manager makes a "dummy" payment of $210 to $245 to get the car out of the lane and retain the original starting balance. He does not deduct for the previous days' usage when the card was inoperable. He does not notate what was done, and in an audit, you see a "payment" of $245, of which the city wants its 25% for parking taxes. But no money was ever collected.
In this system, 17 of the debit cards were incorrectly programmed, so that no value was ever deducted from the card's balance in the history of the card's use. When the customer surrendered their card, the operator refunded the open balance on the card to the customer. In effect, the customer parked for free; all the owner got was the "float" on the money.
The cashier does not know why cards are not working in the lane, but in this case, she has been instructed to let the customer out and the manager will resolve the problem later. Frequently, the cashier does not tell the manager because the cards frequently do not work, so the manager does nothing to resolve the problem. Sometimes the card does not work because there is no money on the card. Sometimes it's in a Passback, Area, or Time violation, but all the customers get a "free out" until the manager fixes the problem.
This problem could be resolved -- and future issues avoided -- if the cashier in the lane could see on a monitor just why the card didn't work. In this case, credit card numbers were held and the debit cards "recharged" when they reached a certain level.
In some cases, there were no signatures on the credit card authorization forms. The following month, the customer contests the charge. The operator does not respond to the complaint or fails to respond in a timely manner, and the charge is eventually reversed. In the meantime, the customer has been parking and their debit card charged. When the charge on the credit card is reversed, the amount of parking used was not deducted. The customer has been parking free.
Last of all, when does an account become "abandoned"? Is it after 30, 45 or 60 days of inactivity? What happens to the money left on the cards? In some hospitals, for example, visitors to long-term patients buy debit cards for $10 a use. Many of them leave before the money runs out on the card because the patient died or was discharged early. Where does this money go?
These are just a few things to consider when using a debit card system. It requires not only a well-organized software program, but also extremely attentive management.
Oh, yes, the benchmark --
The second part of the changeover review consisted of checking the inventory of real property purchased for the garage by the incumbent operator. Several items charged against the management agreement -- such as printers, fax machines, computers, GoJaks and stands, office furniture, and 40 wheel-stops -- were not to be found on-site.
When questioned, the operator produced the items from elsewhere; they were valued at more than $10,000, with the exception of a computer. It seems one of the two computers charged to the location was actually a laptop, which no one can explain. The second computer returned did not work; the hard drive was damaged. But checking its serial number against the invoice, this was not the computer that was purchased.
There also was a photocopy machine being leased for more that $350 a month. In the two years, the owner paid more than $4,000 for a photocopy machine. It was later determined that the machine was used to copy documents for several of the other locations managed by the incumbent operator.