A new pain for cities.
After finding a parking ticket lashed to his windshield, Seattle resident Dan Lear normally would have bitten the bullet and paid up, even though he felt misled by street signage.
Instead, Lear decided to try his luck with DoNotPay, a free bot service that streamlines the process of contesting parking tickets. The service helped Lear win a dismissal in 2016, leaving him a little bit richer and Seattle a little bit poorer.
New technology-powered services like DoNotPay, WinIt and TurboAppeal are encouraging more people to challenge legal hassles like inaccurate tickets and property taxes online. While these tools can help citizens avoid unfair penalties, they also might tempt some users to game the system, and could strain the resources of local governments. These potential side effects might come at an inopportune time for municipalities, whose budgets may be squeezed under the new tax rules.
“I guess I’m torn between supporting my local government but also ensuring that people have the right to appeal things that they feel are not fair or not legal,” said the victorious Lear, who is an attorney by trade.
DoNotPay asks users a series of questions, such as whether a parking sign was difficult to read or a ticket had incorrect details, then produces a letter with a formal legal defense that drivers can mail in or submit online.
The free service has helped drivers across the U.S. and the U.K. squash more than 450,000 parking tickets representing $ 13 million in fines; users win dismissals more than 50 percent of the time, by founder Joshua Browder’s estimate. That compares to a dismissal rate of around 35 percent in Los Angeles and 21 percent in New York City.
Parking tickets are “used as a source of revenue, which is wrong, and something I’m trying to change for the longer term,” said Browder, who has been called the “Robin Hood of the internet” by the BBC. Local governments, he added, “generally don’t like me.”
Having recently clinched $ 1.1 million in seed funding, DoNotPay lists investors including Andreessen Horowitz, Greylock Partners and attorneys with the firm Wilson Sonsini. The company plans to expand into helping users fight property taxes and file for divorce, among other things.
WinIt, a mobile app that currently only services New York City but plans to expand this year, takes parking ticket challenges to the next level. It builds a legal defense with minimal or zero input, and then argues for a dismissal, often in court through a partner attorney, and proceeds “even if there’s a 5 percent chance that we can dismiss the ticket,” said WinIt CEO Ouriel Lemmel.
WinIt collects a fee — equal to half the fine — but only if it succeeds. Drivers can even sign up for WinIt’s “Ticket Guardian,” which will automatically challenge any new ticket associated with a customer’s license plate number as soon as it hits a government database.
Companies that depend on drivers are taking note: Ride-sharing app Via and delivery service Postmates both offer discounts on WinIt to their drivers.
WinIt expects to contest 3 percent to 4 percent of all New York City parking tickets this year, which could amount to well over 300,000 tickets, if 2018 ticket volume is similar to previous years. That could represent around $ 6 million in potential lost revenue for the city.
Appealing property taxes
At least one startup is also taking aim at a much larger source of municipal revenue: Property taxes.
Machine-learning-powered TurboAppeal makes it much easier for homeowners to challenge the property assessments used to levy property taxes. The company had raised more than $ 7 million from investors including online mortgage lender Guaranteed Rate, KGC Capital, Hyde Park Venture Partners and real estate brokerage @properties before being acquired by Paradigm Tax Group for an undisclosed sum last year.
Homeowners can get detailed data and instructions that can cut the time needed to prepare a compelling appeal from hours to 30 minutes, according to Stace Hunt, marketing director at Paradigm. Priced at $ 49, the automated service typically costs much less than a property tax attorney.
Amanda McMillan, a Chicago realtor who used TurboAppeal to shave $ 700 off her 2015 tax bill, said a few clients who probably would not have otherwise fought their property taxes followed her advice and gave TurboAppeal a whirl. To their delight, they won reductions, she said.
TurboAppeal had reportedly generated more than 100,000 property tax appeals as of May 2017; it covers 64 counties and 23 million single-family homes and has claimed a success rate of more than 75 percent in the past.
Some data suggests that self-service companies like TurboAppeal and DoNotPay have lots of room to grow.
Public New York City data, along with statistics provided to Recode by the Los Angeles Department of Transportation, showed that fewer than 10 percent of parking tickets were challenged in those two cities over the last few years, while less than 5 percent of properties in all but one of New Jersey’s 21 counties saw their tax bills appealed in 2016.
But more fine dismissals and property tax reductions would mean less money for local schools and police departments, noted Megan Randall, a research associate at the Urban Institute. Property taxes reportedly make up roughly 30 percent of local government revenue nationwide.
Illustrating how services that target this revenue could pose a fiscal nuisance, New Jersey’s Monroe County was forced to issue a bond in 2011 to cover $ 5 million in refunds due to a spike in property tax appeals. The increase was driven by the housing meltdown, though the town’s finance director at the time also cited attorneys “trying to convince residents to file mass appeals,” the Star-Ledger reported.
Parking tickets, meanwhile, account for less than 1 percent of local government revenue nationwide, but some municipalities are much more reliant on fines than others.
For example, in 2013, 21 of the 90 municipalities in Missouri’s St. Louis County collected more than 20 percent of revenue from court fines and fees, of which parking and speeding tickets are a large contributor.
Drops in traffic tickets can cut into state budgets, too. A decrease in ticket volume forced the Nevada Supreme Court to seek a bailout in 2015. DoNotPay and WinIt can help users fight moving violations such as speeding tickets, so they could also nibble away at revenue from a range of traffic fines, not just parking tickets.
A jump in appeals would also increase the workload of municipal employees who are tasked with reviewing ticket and tax challenges.
“At this point, we don’t have an automated process, so it may cost our constituents money,” said Mark Granado, manager of parking operations and support for the LA Department of Transportation.
Moreover, many people may use these services to try to game the system, not to right a wrong.
WinIt and DoNotPay can help users get off on technicalities, such as if a ticket incorrectly describes a car’s color or make. Such errors can cost big bucks: New York City recently announced that it would refund a reported $ 26 million worth of parking tickets due to the omission of a zero from the ordinance code on roughly 500,000 tickets.
The government finance, parking enforcement and county appraiser employees that Recode spoke to said they didn’t believe that services such as WinIt, DoNotPay or TurboAppeal have boosted ticket and tax challenges so far, but generally acknowledged the potential for this to occur.
Some, including Granado, the Los Angeles parking enforcement official, said they would welcome services that professionalize more appeals, while a few employees encouraged consumers to consider using government systems, questioning whether third-party services add value.
Asked about concerns with their services, WinIt, DoNotPay and TurboAppeal emphasized that they are simply empowering more consumers to exercise their legal rights.
Municipalities could try to deal with more appeal volume by increasing property tax rates and fines or by investing in technology. But this could be harder than ever, given that the recent tax reform may impose downward pressure on property taxes, among other budget constraints.
“In an ideal world, governments would invest in the necessary resources to adapt,” Randall said in an email. “However, in reality, we often become reliant on private-sector actors who derive material benefit from a complex and opaque tax system.”