Aspen city operations in doubt after parking scam
September 23, 2014
Aspen officials defended city operations Monday when a local resident questioned whether handling of a recent parking-meter scam is representative of all city departments.
Since at least 2010, people have been taking advantage of Aspen parking meters by using maxed-out, prepaid debit cards. The system, which was installed in 2007, has been susceptible because payments are processed in batches, meaning cards aren't accepted or declined until the end of the day, even though parking is granted.
Though the city is now blocking prepaid cards containing a certain set of digits, it estimates about $817,000 in unpaid parking debt since 2010. Finance Director Don Taylor claims that about $121,000 of the unpaid debt can be credited to non-fraudulent transactions, meaning the driver unknowingly used an invalid card.
Mike Maple, who frequently comments at City Hall, said during Monday's regular meeting that officials were essentially stealing public funds by allowing declined transactions. When the Parking Department learned of the problem, it began blocking individual cards after the first declined transactions. But because of Payment Card Industry changes, the city hasn't been able to store entire card numbers for some time.
Taylor said the Finance Department learned of the problem by checking a monthly spreadsheet that shows declined and accepted transactions. In 2010 and 2011, declined transactions accounted for about 2 percent of all transactions, he said. But as more drivers learned of the scam, that amount grew, with declined transactions most recently accounting for about 30 percent of the total.
Maple told officials "bells and whistles should have been going off" when the department saw the percentage jump from 2 to 3 percent, a 50 percent increase.
Recommended Stories For You
"If this can happen in the Parking Department, what assurance do I have as a citizen that this isn't happening in other instances?" Maple asked. "I don't see this as a credit-card problem. It does give me serious pause about the accountability of my government in dealing with taxpayer funds."
City Manager Steve Barwick answered that he resents the implication that it's happening in other departments, claiming no other city system uses batch processing. Mayor Steve Skadron also shot back, calling it a unique situation that has nothing to do with other city operations.
Earlier in the meeting, Barwick admitted, "We missed this for far too long, and we know the public deserves better."
Councilwoman Ann Mullins said she's only been learning of the situation through local newspaper articles, "which is a problem." She asked Barwick to explain how the situation went up the chain of command.
Barwick said one of the reasons the scam went unnoticed was because Parking Department personnel changes took place when the fraud began.
"Bottom line is we made a mistake there," Barwick said. "We didn't do adequate training. There wasn't enough analysis on this one type of thing as it was handed from one employee to another."
Another reason, he said, is that parking revenue remained steady despite the scam. He estimated that since 2010, revenue rose by 7.6 percent, which was consistent with other revenue streams.
"So there was no red flag about missing revenue," Barwick said.
Barwick told the council that in some cases a driver used one debit card to purchase multiple parking tickets. Barwick assumed the tickets were then handed out to friends, employees or co-workers.
Councilman Dwayne Romero said that if it's true someone was handing out parking tickets repeatedly, that's "much darker" and more "malicious" than the city's procedural failure.
"All those structural flaws will be pursued with vigor, and I'm sure we'll shake that out," Romero said. "The other side is much more disappointing to me. They're both wrong, but the takings is huge."
Maple responded, "It's dark, but so is also allowing people to pay," referring to the city allowing meters to accept payments during free-parking hours.
The Finance Department estimates unpaid debts of $26,580 in 2010, $37,800 in 2011, $78,036 in 2012, $227,220 in 2013 and $448,000 so far in 2014.
Following the discussion, the council approved an expenditure of more than $600,000 for a new 81-station parking system, which is expected to be installed in December.