Senators call for FTC to look into TxTag vendor following KXAN reports


AUSTIN (KXAN) — Two U.S. senators are calling on the Federal Trade Commission to investigate the contractor responsible for tollway billing problems in Texas and several other state following KXAN reports. 

Senators Bill Nelson, D-Florida, and Gary Peters, D-Michigan, sent a letter to the Federal Trade Commission Monday, asking the agency to investigate Conduent State & Local Solutions, citing problems with toll operations, which KXAN first reported last fall.

In recent years, the company has come under scrutiny for its handling of such systems in Texas, Florida, Michigan, California, New York, New Hampshire and Maryland. Conduent has been accused of billing customers for inaccurate toll charges, late fees and penalties. 

“Conduent’s pattern of mismanaging cashless toll systems is deeply troubling and warrants further scrutiny,” the senators wrote.  “If drivers are being hurt financially, the FTC should hold the company accountable and prevent it from doing further harm.”

Locally, the Texas Department of Transportation says it has “repeatedly held Conduent responsible for not meeting metrics,” charging them over $2.4 million since November 2014.

Conduent shared a statement with KXAN regarding allegations of poor performance when it comes to toll operations. Although they referred us to TxDOT when it comes to toll operations in Texas, the company did say it is committed to good customer service and operations.

“Confidentiality agreements with our government clients prevent us from publicly commenting on these particular issues,” according to the statement. “However, we can say that we are an industry leader in the automated tolling space across the United States and we believe that we serve our government clients, and the motorists using toll bridges and roadways, very well.”

TxDOT recently renewed its multi-million dollar contract with Conduent for a 2-year term, starting July 1, 2018, through June 30, 2020. The initial contract, nearly $100 million in value, was set to expire after a five-year term when TxDOT signed the new agreement last month.

“(TxDOT) is in the process of purchasing software that will be specifically tailored to run our TxTag system,” according to a statement from TxDOT. “Due to the fact this software development will take some time, we had to extend our contract with Conduent for two years.”

Despite renewing its contract, TxDOT could be reevaluating parts of its toll operations centered around customer service. In December, TxDOT issued a Request For Information, seeking “industry comment on the proposed scope of work for a Customer Service Center supporting the agency’s toll operations.”

Rep. Tony Dale, R-Cedar Park, who has multiple toll roads in his Central Texas district, said TxDOT should look into other vendors for its toll operations and replace Conduent.

“I welcome an FTC investigation of Conduent, the TxTAG back office vendor,” Dale said in a statement to KXAN. “I suspect the FTC will find what many Texas drivers already know, namely that customer service and accuracy in billing is sorely lacking.” 

In recent months, TxDOT has assessed more than $312,000 in liquidated damages directly related to Conduent’s performance when it comes to managing toll operations, according to information obtained through an open records request. The damages, noted on invoices from November 2017 through March of this year, indicate problems with customer accounts being replenished, statement generation and delivery, call center answer times, and Pay by Mail image review completion.

TxDOT also just recently accepted a $300,000 settlement offer from Conduent for loss of revenue after issues in early 2016 where statement generation errors “were not cleared quickly enough for customers to be billed, resulting in unbilled transactions.” 

As a result of Conduent’s operations in Florida, lawmakers there have called on the state to reevaluate its contract with the vendor. Earlier this month, the Florida Department of Transportation said it would suspend payments to the contractor after “the company botched a $287 million upgrade of the state’s SunPass toll system,” and failed to process millions of customer transactions, according to the letter.

Florida state lawmakers have also brought up Conduent in Texas, including a KXAN report from earlier this year about a woman whose toll bill skyrocketed to $41,000 after being sent to collections.

“Why would we award a contract to a company that has issues in eight different states, a woman with a $41,000 bill from the same company in Texas,” Florida State Rep. Janet Cruz, D-Tampa, told KXAN’s sister station WFLA. “That is ridiculous and that is going to happen to more Floridians.”

In Texas, Conduent subcontracted with Houston-based law firm Perdue Brandon Fielder Collins & Mott to collect delinquent tolls. In March, TxDOT dropped the collections agency and Conduent began handling all of its toll collection operations. TxDOT also implemented a new law capping administrative fees for delinquent toll drivers at $48 a year.

Still, senators are calling Conduent’s mismanagement “unfair” under the FTC Act, which “prohibits conduct that causes or is likely to cause substantial harm, is not reasonably avoidable by consumers, and is not outweighed by any countervailing benefits to consumers or to competition.”

“We recognize that Conduent is a third-party vendor that conducts work on behalf of state DOTs pursuant to contractual obligations and, as such, those state DOTs are responsible for addressing harm to their citizens,” according to the senators letter. “However, we also believe there is a role for the FTC given Conduent’s practices have directly burdened consumers with onerous toll charges and, consequently, directly and negatively impacted their financial well-being.”

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