The Interstate Commerce Commission, saying "the public has borne the burden of the company's financial problem long enough," reaffirmed yesterday an order requiring Auto-Train Corp. to repay more than $800,000 to its customers.
The ICC issued a sternly worded order that criticized Auto-Train for "imprudent financial practices" and "intolerable misuses of funds that it owes its customers."
Auto-Train, the ICC said, has been using money due customers for refunds on canceled tickets to pay its day-to-day operating expenses. As of July 11, the Washington-based railroad owed customers $826,000 in refunds.
Between June 1 and July 11, the amount of customers' money being used by the company jumped by more than $150,000, the ICC said. The ICC called Auto-Train's practice of withholding refunds "a chronic one" and said "the situation has deteriorated in recent months."
The ICC order claimed that Auto-Train's delays in refunding money for canceled tickets were not, as company officials had previously claimed, merely the result of routine processing delays but a deliverate company policy.
"The commission's staff has called (Auto-Train's) attention to this problem on several occasions, but no significant improvement has occurred," the agency said.
The ICC on June 27 ordered Auto-Train to speed up repayment of refunds as a condition for approving a new issue of Auto-Train stock. The company appealed that decision, asking a "brief breathing spell" and saying it had kept customers' money "as a matter of necessity in order to continue operating."
In yesterday's ruling, the ICC refused to back down, but said it would consider alternative repayment plans.
Initially, the ICC ordered Auto-Train to set up a $500,000 trust fund for its customers and to contribute a portion of its monthly income to the fund until there was enough money to repay all refunds. ICC set a July 15, 1979 deadline. In its latest order, ICC said Auto-Train could not issue the proposed new stock until it complied with the refund provisions. end insert
The ICC ruling could snarl Auto-Train's efforts to get new financing to keep the railroad running. The company is seeking a $3 million loan from an insurance company to pay an overdue debt to American Security Bank, and has applied to the Department of Commerce for a $3 million federally guaranteed loan.