Auto-Train Corp. has failed to comply with an Interstate Commerce Commission order that was supposed to assure that travelers who cancel Auto-Train reservations get refunds that are due them.
The railroad, which last week reported it lost money for the fourth year in a row, was told by the ICC last December to repay severl hundred thousand dollars to passengers and to set up a special $500,000 bank account for the passengers' money.
The order was issued after the U.S. Office of Consumer Affairs complained that Auto-Train was holding up refunds to customers for months at a time. By delaying refunds, the consumer agency charged, Auto-Train was getting what amounted to an interest-free loan from its customers.
Since the December order was issued, ICC records disclose, Auto-Train has missed two deadlines for complying with the commission's terms and has been granted another extension. Last week, Auto-Train notified the agency that it won't meet the latest timetable either.
The railroad's refusal to comply with repeated ICC orders has lead commission member Thomas Trantum to urge the ICC to hold oral arguments on the case.
"The commission has consistently failed to accomplish what it perceives to be consumer protection by imposing conditions on Auto-Train," Trantum complained.
ICC sources say the commission is reluctant to take any steps that might add to the railroad's financial troubles. The latest ICC order puts new limits on Auto-Train's use of funds, but ICC staff members say the new provisions will be no easier to enforce than the original order.
In December, the ICC gave Auto-Train until Jan. 15 to pay all refunds that were 90 days overdue and ordered that all past-due refunds be paid by March 15.
The ICC also imposed restrictions on Auto-Trail's use of the money it collects from customers as advance payment for reservatons. It ordered that $500,000 of advance payments be put into a special account by March 15, to assure that persons who pay for reservations on Auto-Train will get their money back if the railroad's financial troubles became so severe it can't operate.
The $500,000 still has not been paid into the special account and the ICC and Auto-Train disagree over whether all the refunds have been paid.
In a report to the commission on March 21, the ICC's Bureau of Accounts challenged Auto-Train's claim that the Jan. 15 deadline indicated that between 973 and 1,617 riders were still due refunds, the bureau said. The refunds average between $100 and $200, putting the total in the $100,000 to $250,000 range.
As recently as two weeks ago, the ICC issued an order noting, "our staff has not independently verified Auto-Train's claim that over $228,000 has acturally been refunded."
In an interview Friday, Auto-Train President Eugene K. Garfield insisted the ICC report was wrong. "We have paid our refunds," he said. "We made our own verification and we know they've been paid."
Garfield said Auto-Train has not paid the half million dollars into the special account because it has been unable to sell more stock to the public as it had planned. "We in good faith believed we would have our offering (of new stock) by then," he said. "We will comply with the order when we get the offering."
In its latest order, however, the ICC indicated it isn't willing to wait.
Auto-Train's sale of stock is "a completely separate issue from its obligation to comply," the ICC said. It ordered the railroad to put $100,000 a month into the special account starting April 15. Garfield said he has notified the ICC that Auto-Train cannont do that.
Auto-Train's plains to sell $6 million of new stock have been stymied by current conditions in the financial market, he said. High interest rates and depressed stock prices have made it difficult for many companies to raise money.
Prospects for selling additional auto-train stock also have been hurt by the railroad's continuing financial problems. Last week the Washington-based railroad posted a $22 million loss for 1979. That was only half as much as Auto-Train lost the year before, but it was still the fourth fiscal year in a row of red ink.
Despite predictions that soaring gas prices and long lines would send vacation travelers flocking to Auto-Train, the railroad's total revenues for the year increased only 10 percent, to $25.9 million from $23.6 million.
Recently the company has tried to diversify into rail car building and repair. Apparently fearing passenger refunds might be used to finance a new vednture, the ICC has order Auto-Train not to transfer funds to any subsidiaries without specific permission.
Auto-Train was founded by Garfield to prove that passenger trains could be run profitably without government subsidies. Headquarters in Washington, Auto-Train carries passengers and their cars between suburban Lorton and Sanford, Fla.