Taxi meter scam overcharged 1.8 million riders

March 12, 2010 5:02:55 PM PST
New York City officials have discovered a widespread scam in which thousands of taxi drivers overcharged passengers more than $8.3 million. The Taxi and Limousine Commission said Friday that it had found at least 1.8 million trips over the past two years where passengers were ripped off.

More than 35,000 drivers are accused of overcharging their customers an average of $4.45 per trip.

While over 1.8 million trips is a significant number of overcharge violations, there were 361 million taxi trips during that time period, so the illegal fare was only charged in 0.5% of all trips during that time period.

The scam was primarily perpetrated by a small number of drivers, with 3,000 drivers overcharging more than 100 times.

Officials said drivers overcharged by illegally setting their meters at a rate they are supposed to use for trips to the suburbs.

That rate is double the rate within city limits.

In a few weeks, taxi riders will see an alert when the extra rate code has been activated.

Rate Code 4 should only be used in Nassau or Westchester Counties.

Passengers will be advised to contact 311 with questions or complaints.

Each vendor's solution would also include some combination of a sound alert to the passenger and/or the driver and require an acknowledgement by the passenger before the message would disappear from the screen.

The alert will appear even if the passenger has turned off the screen.

TLC is also exploring the development of a geo-fencing solution that can remove manual Rate Code 4 activation by the driver.

Rate Code 4 would be automatically activated upon crossing into Nassau or Westchester Counties.

On his radio show Friday, Mayor Bloomberg commented on the allegations saying, "As you saw the other day, there is- some of the drivers were setting their meters to out of town- there's a switch, you just throw it and you pay more at a higher rate if you're out of the City. Well somebody in the back seat doesn't notice. How do we know? Because now we have, thanks to Matt Daus, GPS and a reporting device in every cab so we can look and see from here to there, and what they charged. And it's so obvious, it's double what it should be. And so now we're going back and, you know, some of these people could face serious charges."

The TLC commented on the situation saying, "Thanks to the new taxicab technology, the TLC was able to initiate a review of GPS data, which has revealed evidence of a considerable number of taxicab drivers having improperly applied a suburban rate code to fares in place of the correct city code. When used properly, the code effectively doubles the metered fare from the city limit to destinations in several nearby counties. The matter was referred to the Department of Investigation for possible criminal action. We anticipate that these drivers will also face TLC-imposed administrative penalties, to include license revocation and monetary fines."