The U.S. Oiffice of Consumer Affairs yesterday filed a formal protest over Auto-Train Corp's long delays in paying refunds to customers who cancel reservations.
In a notice filed with the Interstate Commerce Commission, the White House consumer office urged the ICC to set deadlines for getting the customers' money back and to make Auto-Train pay interest on the overdue refunds.
The ICC earlier this year accused Auto-Train of misusing customers' money by hanging on to refunds for months at a time and using the cash to pay other debts. Auto-Train has lost money for three years in a row and has serious financial problems.
As of Nov. 15, Auto-Train owed $695,000 to customers for refunds and about $185,000 of that was due to customers who have waited three months or more for their money.
The Office of Consumer Affairs said it was intervening in the case because of "complaints from consumers who are unable to collect monies due from Auto-Train. Individual consumers indicate that they are unable, despite repeated attempts, to collect money owed to them."
Auto-Train is asking the ICC for permission to borrow $3 million from an insurance company so it can repay an overdue $3 million loan to American Security Bank. The bank has given the railroad until January to pay the debt.
The Office of Consumer Affairs stopped short of asking the ICC to deny the financing request, but urged the agency to require a plan for paying off the passengers as well.
The protest noted that Auto-Train is accumulating new debts to customes almost as fast as it pays off old ones. "Auto-Train has, in effect, opened a revolving charge account with the unwitting public."
The consumer office suggested that refunds due Auto-Train customers be placed in an interest-bearing account, supervised by an independent trustee and that the railroad be required to report every two weeks on its progress in paying off the debts.
When asked about the investigation of the refunds by the consumer office, Auto-Train President Eugene K. Garfield said, "we're as concerned as anybody about the consumers. We're paying them as fast as we can."
The Office of Consumer Affairs acknowledged Auto-Train's precarious financial picture and the value of keeping the train running between Virginia and Florida. "We recognize that Auto-Train is struggling to survive and that the service provided by Auto-Train is especially important in light of the continuing need to conserve energy."