The City of Edmonton is on the hook for $45,000 in lost revenue because of fraudulent transactions involving a malfunctioning smart fare machine used within the public transit system.

Those details were made public in the city auditor’s annual report for 2025 and discussed during Friday’s audit committee meeting. 

The city auditor’s office was informed that an estimated $65,000 in fraudulent transactions were conducted at the faulty machine. 

The transactions were committed by an unknown number of people from September 2024 until the issue was discovered by the city on June 13, 2025 and reported to the Edmonton Police Service. 

Over 300 suspicious Arc cards were identified and blocked with about $20,000 remaining on them, which the city said it was able to recover. 

The Edmonton Transit Service said it has “reinforced control procedures to prevent future incidents.”

Scant details were available during Friday’s audit committee meeting with part of the session held in private. 

The city’s mayor and councillors are not allowed to disclose what is discussed in private sessions.

“There are no rider-related risks to the security of Arc cards,” Carrie Hotton-MacDonald, ETS’ branch manager, said in a statement to CBC News. 

Committee vice-chair and Ward Ipiihkoohkanipiaohtsi Coun. Jon Morgan put forward a motion to have administration provide a confidential memo on the actions they took to address weaknesses identified in the auditor’s report. 

The motion passed unanimously. 

Ward Anirniq Coun. Erin Rutherford said it’s important to get a full accounting of what has been done by administration to address any system vulnerabilities. 

“[It’s important] that there is some follow-through on those risks, and that those risk gaps are closed, and that we have validation that they are closed,” she said. 

City administration said the loss represents a small portion of the city’s transit revenue which is about $120 million per year.

“Fraudulent activity can happen in any organization, any business, and what’s really important is to have the processes in order to actually find them out,” Ward sipiwiyiniwak Coun. Thu Parmar said in an interview with CBC News.

“I want to assure Edmontonians that … every dollar matters.”

In a statement to CBC News, EPS said it was contacted by transit security about suspicious activity involving Arc card reloads happening over several months.

Investigative efforts to identify suspects have been unsuccessful so far, noted EPS spokesperson Nancy Carlson.

She added there is no indication that there is a connection to organized crime.

Karim Jamal, chair of the University of Alberta’s department of accounting and business analytics, said the nature of this kind of fraud isn’t particularly sophisticated. 

“It’s not the mafia or something,” he said in an interview with CBC News. 

“They wouldn’t get involved in a scheme for $45,000 or $50,000, so these are more just average people probably.” 

Jamal said it will be important for the City of Edmonton to ensure rigorous testing for its machines. 

“The city will have to be careful not to leave these kinds of holes in their machine, because if there is one, these guys are really good at exploiting that, and in a very short period of time, they can do some damage to you,” he said.

Lawyer Anny Wang with Boisvert Wang LLP said a crime like this would be difficult to prosecute. 

“The amount of manpower it would take to identify a great number of people involved, and then for the police resources to be used in comparison to each individual transaction — if they’re very low value, it’s unlikely for resources to be devoted to that.”