The US Federal Trade Commission (FTC) has indicated it plans to take legal action against fuel card services giant FleetCor alleging that it has charged customers at least hundreds of millions of dollars in hidden fees after making false promises about helping customers save on fuel costs.
Headquartered in Atlanta, Georgia, FleetCor reported $2.4 billion in annual revenues in 2018.
It markets its fuel card services in the US under its own ‘Fuelman’ brand name, as well as through co-branded cards, to businesses around the country.
The FTC alleges FleetCor and its chief executive officer Ronald Clarke falsely told potential customers that they would save money, be protected from unauthorized charges, and have no set-up, transaction, or membership fees.
However, the regulator identified a broad array of fees that the defendants charged in ways that customers did not detect, amounting to hundreds of millions of dollars.
The fees often have been charged on a per-transaction basis or have been required for membership in FleetCor’s programs, the FTC said.
The FTC alleges the company often waited to begin charging many fees until a few billing cycles had passed, making the fees harder to detect among a customer’s monthly bill fluctuations.
FleetCor’s invoices often failed to disclose that any fees were being charged, requiring customers to proactively view other account management reports. Even on those documents, many fees were obscured among other information, the FTC claimed.
In addition, the FTC alleges that the company also did not post customer payments when they were received. That led to late fees for on-time payments and ‘high credit risk’ fees, because the customers ostensibly had paid late.
According to the regulator, customers generally did not achieve the advertised per-gallon savings by using fuel cards. To support this allegation, the complaint cites FleetCor’s own documents, which show that customers’ average savings on fuel have fallen short of the defendants’ marketing promises.
FleetCor said it “strongly disagrees with the FTC’s complaint”, pointing out that the FTC Commissioners were not unanimous in approving it. It said the claims “are without merit” and said it would “vigorously defend ourselves against the FTC in court”.
In a statement, the company said: “We believe the FTC’s complaint is based upon fundamental misconceptions of the company, its customers and its products.”
FleetCor said its customer disclosures are clear and communicated repeatedly, with a thorough and extensive on-boarding process that describes the program’s features in both online and written materials.
Fee-specific terms are included on every customer invoice, and the company also itemizes fees on management reports, and annually distributes complete terms and conditions to every customer.
The company also argued that given fuel is a significant operating expense for commercial fleets, its customers read and closely monitor the invoices and fleet management reports it provides and can opt out of the service at any time.
FleetCor says its fees are in line with industry standards and understood by customers, and are clearly articulated, defined and disclosed in its advertising.
It maintains a large percentage of customers receive savings from retail fuel prices, while also benefiting from reductions in unauthorized purchases and administrative costs enabled by fuel card controls and reporting.
In addition, FleetCor said it strongly disagreed with the FTC’s assertion that existing materials failed to meet market standards, and therefore do not believe redress is warranted.
The statement concluded: “FleetCor takes governance and oversight matters seriously and is confident that it has acted in accordance with all applicable laws. We have a strong culture of compliance and are committed to operating our business in an ethical and transparent manner.”