Addressing the Challenge of License Plate Fraud in Today’s Electronic Tolling

All-electronic cashless tolling (AET) has revolutionized toll collection worldwide across the spectrum of operations and customer experience.  Undeniably, AET’s evolution has enhanced value to motorists traveling on tolled facilities.  Non-stop toll facilities operated at highway speeds benefit safety, traffic flow, congestion reduction, travel time reliability, emissions reduction, and customer convenience.  

Today, more than nine out of every ten new toll system deployments are non-stop cashless operations.  We have the advances of digital video imaging technology to thank for making AET the most popular form of toll collection.  The ability to capture license plate details accurately and reliably has allowed road pricing transactions electronically for all road users.  For motorists who opt not to open an electronic tolling account and use an on-board transponder, license plate images are a means to charge drivers without the need to collect cash at the roadside.  Simply capture a license plate image, identify the vehicle owner, and bill them for the toll charge.

Yet, simplicity is in the eye of the beholder.  The benefits of today’s electronic tolling practices have come with new costs and challenges.  Toll operators face higher transaction costs of image processing, data acquisition and integration challenges, and revenue leakage.  Revenue leakage is a known cost of doing business in this environment and is managed through a variety of pricing, adjudication, enforcement, and collection strategies.  Nonetheless, any toll operator can tell you that despite a growing arsenal of collection practices, you should never underestimate the inventiveness of bad actors to try to beat the system.  Recently, a rise in fraudulent and altered license plates has challenged our systems and business practices to collect video tolls effectively.  

Some of the greatest difficulties being faced rest with state regulations that manage automotive dealerships and their credentials.  States with lax guidelines for becoming a used vehicle dealer and producing temporary license plates have offered an avenue for fraud and abuse.  This has propelled a range of vehicle-based offenses, including toll evasion.  Texas was one of the most troublesome states until last year. 

The Texas state legislature has been proactive in advancing positive measures to manage fraudulent temporary license plates and other types of license plate fraud.  Texas’s commitment to eliminate temporary paper plates as a source of fraud and abuse is a model for other states to consider.  A recent Texas law is moving toward full metal plates, even for temporary plates, beginning in 2025.  Other legislative measures to increase penalties and enforcement are positive examples of what states could be doing to address the issue.  These added measures elevate temporary license plate fraud as an offense of tampering with government records, as well as a series of new legislative language to address wrong, missing, altered, and obscured license plates.  

While vehicle registration and licensing falls in the domain of the states, there is a growing Federal interest in curbing fraud and abuse.  In part, the Federal motivation is linked to confronting highway safety concerns and other offenses enabled by the presence of improperly credentialed vehicles on our roads.  It is refreshing to note that in some circles, Federal interest is tied directly to increased toll evasion.  

Last week, the IBTTA government affairs team met with staff from Representative Robert Menendez’s office (NJ-8).  They were specifically focused on how the toll industry has been affected by fraudulent license plates and what responses have been pursued to address the matter. Representative Menendez used the information from our briefing in his inquiry to USDOT officials at a hearing of the House Transportation and Infrastructure Committee’s Highway and Transit Subcommittee on the Infrastructure Investment and Jobs Act implementation.  The inquiry was targeted at license plate abuse and toll evasion.  

As we consider the need for Federal solutions to the dwindling fuel tax revenues, and states address a similar need, IBTTA advocates that new tolling and distance-based road charging are promising parts of the solution.  Two possible actions that Congress and the Federal transportation program could consider in the future include: 

1. Support and fund industry collaboration among the road pricing and transportation agencies, state departments of motor vehicles, and law enforcement to develop and publish a set of guidelines and best practices that would simplify license plate designs and appearance to promote easier and more reliable information capture through digital imaging technologies.  These guidelines could also offer advice that states might consider regarding license plate frames and covers that reduce readability.  The availability of such guidelines may help promote better road and vehicle safety, pricing and revenue programs, and driver compliance.  
2. Consider Federal grant programs that provide financial assistance to ensure that all states have effective information technology systems and data exchange capabilities.  Today, toll operators experience uneven capabilities and sophistication among states to provide effective and efficient data exchanges and interfaces.  Such funding would support policy initiatives and operating programs at an interstate scale that promotes safety, law enforcement, and transportation revenue and help states reach 21st century standards.  

IBTTA remains committed to working with Federal and state partners to support roadway safety and sustainable and reliable transportation revenue sources.