A report from the San Francisco Controller’s Office released Monday is recommending The City’s transportation agency go to a cashless cable car fare system.
Auditors from the controller’s office took a total of 30 rides in December 2016 in plainclothes on the Powell/Hyde, Powell/Mason and California Street cable car lines during the weekdays and weekends to see if cable car conductors properly collected fares and issued receipts to passengers.
While auditors were on the cable cars, conductors did not collect fares from them on 11 of the 30 cable car rides, which equals to $77 in revenue, the report said. An adult single ride on the cable car is $7.
Auditors also observed that conductors did not always collect fares or ask for proof-of-payment from at least one other passenger during 21 of the 30 cable car rides. The report said the San Francisco Municipal Transportation Agency may have lost up to $1,246, depending if those passengers who were not asked for fares had intentions to with pay cash.
Conductors are supposed to collect fares from passengers and issue a pre-numbered receipt. If a passenger does not want a receipt, the conductor is to destroy the receipt and not retain it as part of their unsold receipts, according to the report.
The report said auditors took an additional 12 rides to “further test the fare collection practices” with two conductors — one who did not issue a receipt and one who asked the auditor if they wanted a receipt, but did not issue or offer a receipt to another passenger.
Auditors wanted to see if those incidents were isolated or if the conductors were cheating the fare system by pocketing fares, according to the report:
“In one of the subsequent rides, one conductor again did not give the auditor a receipt, indicating that the conductor may have been fraudulently diverting the fares.”
The controller’s office reported the incident to the SFMTA, which handed over the incident to the San Francisco Police Department. The investigation led to the arrest of David Reyes, 55, and Albert Williams, 61, charged in April with embezzlement in April of this year.
Reyes is due back in court on Aug. 14 and Williams on Tuesday. Both men face felony charges of misappropriation of public funds and embezzlement and are out of custody on bail.
According to the report, the SFMTA’s cable car fare procedures can lead to fraud because the transit agency bases estimates on how much fares should have been collected simply on the number of receipts issued by the conductors:
“If a conductor does not issue a receipt, SFMTA does not know that a fare should have been collected, allowing the conductor to pocket (that is, embezzle) the money instead of reporting it and turning it in to SFMTA.”
The controller’s office is recommending the SFMTA go to a cashless fare system on cable cars, including installing ticket vending machines at key locations along cable car routes, extending hours of operations at ticket booths, train conductors to use handheld devices that will accept credit card payments, and promoting the MuniMobile payment app.
MuniMobile allows passengers to buy cable car tickets and Muni bus and rail tickets in advance.
The report recommends that if it’s not possible to go cashless, that fareboxes be added inside cable cars and periodic undercover operations be conducted to observe how often conductors collect fares.
The SFMTA said in the report that it is exploring options for riders to get their hands on cable car tickets before boarding, including launching a promotional marketing campaign for MuniMobile in fall 2017.
Transit officials said there are plans underway to develop a pilot program to require prepaid fares on cable cars during the hours when ticket kiosks are open, but said it is “unlikely” for a full cashless system given the nature of the ridership demographics.
The SFMTA it is not considering installing fareboxes as an option because of “power issues” and other safety and technical issues involving the infrastructure of the cable cars.
Officials said they are coordinating with the SFPD Muni Response Team to observe conductors collecting cash at least once every quarter on random select dates.
One final recommendation from the controller’s office is to provide cash-handling procedures to conductors and grip operators and continue to do so annually.
The SFMTA said it will provide training to all conductors and grip operators on handling cash fares, and take disciplinary action or possibly terminate those who misappropriate funds.