The Interstate Commerce Commission voted yesterday to direct the Justice Department to file a civil suit that requires Auto-Train Corp. to establish a $500,000 escrow account to repay consumers who had cancelled their reservations.
ICC members have been complaining that the Washington-based rail company has failed to comply with an ICC order of last December mandating it to set up a special $500,000 bank account to repay travelers who had cancelled their reservations but failed to get the refunds due them.
The civil suit would seek a federal court order directing Auto-Train to comply with the agency's December order. Then failure to comply would put the company in contempt of court, a criminal offense, not just a civil violation, an ICC spokesman said.
Auto-Train carries passengers and their autos from Lorton to Sanford, Fla.
The December order was issued after the White House Office of Consumer Affairs filed a formal protest with the ICC complaining that Auto-Train was holding up refunds to customers for months at a time. By delaying the refunds, the financially troubled Auto-Train, which has lost money for four years in a row, was getting what amounted to an interest-free loan from its customers, the consumer agency charged.
The ICC action ordered Auto-Train to pay by jan. 15 all refunds that were 90 days overdue, and to pay all the other refunds due by March 15.
In addition, the ICC had imposed restrictions on Auto-Train's use of the money it collects from customers as advance payment for reservations. Five hundred thousand dollars of such advance payments was to be placed in a special account by March 15 to assure that persons who pay for reservations on Auto-Train would get their money back if the railroad's financial troubles became so severe that it couldn't operate.
According to ICC sources, the money still has not been put into the special account, and the agency and the company apparently disagree over whether all the refunds have been paid.
The company has been trying in various ways, but without substantial success, to raise cash to pay its increasing debts -- lease payments on its locomotives as well as on its passenger and auto-carrier cars, and fees for use of the track and crew of other railroads, as well as the refunds. Besides an announced plan to try to sell stock in a subsidiary, the company also is asking for government-guaranteed loans.