A long list of convenience fees and other unexpected charges awaits CTA and Pace Ventra fare-card customers who sign up for an optional prepaid debit card account, a Tribune analysis of the more than 1,000-page CTA contract reveals.
The agreement the CTA reached with its private-sector partners looks like a good one for the perennially cash-strapped transit agency, which will receive a continuous stream of nonfare revenue generated by the host of debit card fees.
But for prospective Ventra customers who are thinking about accepting the offer of a MasterCard prepaid debit account to make retail purchases on the same Ventra card they use for transit fares, it will be vital to closely read the legal jargon in registration documents to avoid costly surprises, consumer experts warn. The Ventra debit card fees have not been previously disclosed by the CTA and Pace.
Ventra debit customers who fail to do their homework will likely be unaware that the charges can quickly pile up - until they see their account statement, which carries a $2 fee if a paper copy of transactions is requested, according to the Ventra contract.
Disputing the charges could get expensive, too. Card owners are subject to a $10-per-hour "Account Research Fee.'' That's on top of a $2 fee for making a phone call to Ventra's customer service center, which is classified as an "Operator Assisted Telephone Inquiry.''
"It's always the case that the big print giveth and the small print taketh away,'' said Steve Bernas, president and chief executive officer of the Chicago region's Better Business Bureau. "Consumers need to read it all ahead of time and determine whether the Ventra debit card is right for them."
Financial experts said these types of fees, and the amounts charged, are fairly typical across the debit card industry. CTA officials said the Ventra prepaid debit account fees are in the middle of the pack and in some cases lower than other debit cards.
What's novel here is that when Ventra launches this summer, the CTA and Pace are expected to become the first U.S. transit agencies to offer a dual transit-debit card.
Public anger over the myriad fees could be directed at the two transit agencies, one expert said.
"The CTA is kind of sticking their neck out if people perceive this product as predatory,'' said Linda Sherry, director of national priorities for Consumer Action, a nonprofit consumer education and advocacy group. "Why should public transit agencies be involved in making interchange fees off people? These are supposed to be public-serving agencies, and a fee-laden card isn't exactly a public service.''
CTA and Pace riders will have the option of signing up for a Ventra transit card only - without the prepaid debit card that could incur fees.
Those debit account fees, the CTA contract states, are subject to change "from time to time,'' indicating the likelihood of escalating charges as well as more money rolling in for the CTA and the private companies involved.
In addition to the $5-a-month "dormancy fee'' that the CTA board approved last week - to be charged to Ventra transit-fare accounts that are inactive for 18 months - the prepaid debit side of the card will be charged $2 a month after 18 months if no retail purchases or money transfers into the account are made, officials said. Cardholders could face an account hit totaling $7 a month.
Ventra debit account customers will also be charged a $2.95 "Reload on Internet'' fee each time they add money to the retail side of Ventra cards using a personal credit card. The $2.95 fee is not charged if a credit card is used to purchase transit fares or passes, officials said.
Use your Ventra debit account to withdraw cash at an ATM? A $1.50 service fee will be tacked on, regardless of where you do your banking. The CTA's banking partner in the Ventra system is MetaBank, a specialty financial institution.
If you are a Ventra customer who becomes fed up with all the ancillary charges and want out, or say you simply move to North Dakota and don't need a CTA Ventra card anymore, you will be assessed a $6 "Balance Refund Fee'' to receive a check in the mail for the remaining money on your Ventra account - minus the $6.
CTA officials said they are not promoting or pushing the debit card on anybody.
"First and foremost, this is a transit contactless reloadable fare program. It is 100 percent optional to sign up for the retail side of the card,'' said Eric Reese, CTA revenue director.
Some riders will decide not to use any type of Ventra card when it is introduced this summer and CTA and Pace begin to phase out existing fare cards through early 2014. Personal credit cards with the most up-to-date technology, called radio-frequency identification, will also be accepted as fare payment and to purchase multiday passes, and no convenience fees will be charged, officials said.
CTA President Forrest Claypool said there is no reason CTA customers would need to pay a penny more under the Ventra system. If they do, it's voluntary, Claypool said, citing the CTA's new $3 single-ride train ticket as an example of a fare that can and should be avoided.
Rail riders can continue to pay $2.25 instead of $3 if they buy a Ventra card, Claypool said. The Ventra card costs $5, however. The $5 is credited toward future transit fares if the card owner registers it within 90 days of purchase.
The savviest of commuters probably could learn over time to dodge most, if not all, of the hidden debit-related fees, but figuring out how isn't obvious.
Ventra card users can, for instance, avoid the $2.95 Internet reload fee by linking their Ventra debit retail account to a personal bank account instead of to a credit card.
But neither the CTA nor Cubic Transportation Systems Inc., the San Diego-based company that the transit agency hired to develop the Ventra open-fare system; nor MasterCard; nor MetaBank; nor First Data, which will issue the prepaid debit accounts, have disclosed the extra charges or how consumers can avoid them.
A CTA public education campaign on all aspects of the Ventra card, including the fees, will start soon, CTA spokesman Brian Steele said.
Transparency must be a central part of the process, consumer watchdogs said.
"It is the responsibility of the card provider to make sure they are developing a fee model that makes fees as transparent and as few as possible,'' said Tom Feltner, director of financial services at the Consumer Federation of America. "Any time you see a large number of fees, as a consumer you should take a hard look at that product to determine whether it fits your (needs) and compare it to other cards on the market.''
Officials at Cubic, which in 2011 was awarded a $454 million CTA contract to create what ultimately became the Ventra system, said in written documents that "managing expectations'' will be a crucial element in the Ventra public relations campaign.
"The open payment system is likely at some point to be subject to criticism, so it's important that all possible points of contention be considered and prepared for,'' according to a passage in a Cubic TOP report, which stands for Transit Open Payment team.
"Spin needs to be heavily positive. Also need to spin the transition away from the (old) cards, and the fact that there are dates certain for that to happen.''
Cubic officials said they played no role in negotiating the fees linked to the prepaid debit portion.
"We don't have anything to do with any of the charges,'' said Timothy Hill, Cubic's director of corporate communications. "We administer whatever CTA establishes as the guidelines.''
Cubic does, however, "make a very small amount based on card use,'' Hill said. "It is a partnership, but ultimately the rate structure and charges are generated out of CTA.''
Reese, the CTA's revenue director, said he could not provide specific numbers showing how much the CTA will receive from the debit fees, because it is not known how many people will sign up for debit accounts.
"The CTA share will be pennies (per fee transaction), maybe a nickel at best,'' Reese said. He said the primary benefits to the CTA are getting out of managing the fare-payment system, which will save the agency at least $50 million over the next 10 years.
While the companies are hopeful that commuters who have the MasterCard debit account incorporated into their Ventra card will use the card every time they make a purchase, there doesn't seem to be any marginal value added for commuters who already own credit or debit cards to obtain a Ventra card. Those personal credit or debit cards will be accepted for transit fares without the possibility of incurring any convenience fees, officials said.
The CTA expects to put Ventra cards in the hands of low-income people who currently don't own a credit or debit card and who conduct many of their financial transactions at currency exchanges, which are renowned for charging high service fees.
The Ventra card "is actually a means for people who don't have bank accounts to be able to use and be able to have the retail relationships that others have today,'' Reese told the CTA board last week.
It may be a tough sell, some experts said. Many low-income people are cash-centric in their spending habits because they are wise to the ways of credit card charges.
"I hate the whole idea,'' Sherry said. "I don't believe in making a lot of money off the backs of low-income folks who cannot really afford it."
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