An electronic toll collection system, reader, method and transponder for communicating occupancy status. The vehicle-mounted transponder includes a selection device that permits a user to select between a normal and high occupancy state. The transponder reports its occupancy status to a reader. If the electronic toll collection system processes a toll transaction and the transponder claims high occupancy status during the toll transaction, the fact that high occupancy status was claimed during the transaction is recorded in memory within the transponder for later enforcement and verification purposes.