FLEETCOR Says 'Strongly Disagrees' With FTC Lawsuit, Highlights Customer Transparency Measures

FLEETCOR Technologies, Inc. (NYSE:FLT) (“FLEETCOR” or the “Company”), a leading global business payments company, today issued the following statement regarding the lawsuit announced by the U.S.

Benzinga · 12/20/2019 21:25

FLEETCOR Technologies, Inc. (NYSE:FLT) (“FLEETCOR” or the “Company”), a leading global business payments company, today issued the following statement regarding the lawsuit announced by the U.S. Federal Trade Commission (FTC) related to the Company’s U.S. direct card business within its North American Fuel Card business.

FLEETCOR strongly disagrees with the FTC’s complaint, which the FTC Commissioners were not unanimous in approving, and believes the FTC’s claims are without merit. We intend to vigorously defend ourselves against the FTC in court. Importantly, this lawsuit is limited to the directly-issued portion of our U.S. fuel card business, and we believe these matters are not and will not be material to the financial performance of the Company.

The Company has attempted to engage constructively with the FTC to resolve this matter. However, these discussions reached an impasse primarily related to what FLEETCOR believes are unreasonable demands for redress made by the FTC. As a result, the parties have so far been unable to reach a settlement regarding the matter.

We believe the FTC’s complaint is based upon fundamental misconceptions of the Company, its customers and its products, specifically in the following key areas:

  • FLEETCOR’s customer disclosures are clear and communicated repeatedly. The Company’s card programs include a thorough and extensive on-boarding process that describes the program’s features in both online and written materials. These materials provide the information necessary to understand the benefits and fees associated with a chosen program. Further, we reiterate fee-specific terms on every customer invoice, itemize fees on management reports, and annually distribute complete Terms & Conditions to every customer.
  • FLEETCOR’s customers are sophisticated businesses who read their contracts, invoices and reports. The Company’s customers are businesses that operate commercial fleets and understand their contracts. FLEETCOR’s customers contract with the Company primarily to take advantage of our control and reporting tools, which go beyond the capabilities of general-purpose credit cards and enable customers to review all fuel card expenses in real time. Given fuel is a significant operating expense for commercial fleets, our customers read and closely monitor the invoices and fleet management reports we provide. All customers affirm their acceptance and understanding of the card program and its Terms & Conditions during the application process. Notably, our standard Terms & Conditions do not require a contract term, allowing customers to choose to opt out of the service at any time.
  • FLEETCOR’s fees are in line with industry standards and understood by our customers. The Company actively engages with its customers about its fees, and believes its strong share of the U.S. fuel card market underscores that customers choose to stay with FLEETCOR year after year.
  • FLEETCOR’s savings offers are clearly articulated, defined and disclosed in its advertising. Like other industry participants, the Company offers savings “up to” a maximum level, subject to specified caveats (e.g., purchase volume, account in good standing, preferred site selection, etc.). Pricing rules associated with savings offers are programmed into our processing systems, ensuring appropriate and consistent administration thereof. A large percentage of customers receive “hard savings” from retail fuel prices, while also benefiting from reductions in unauthorized purchases and administrative costs enabled by fuel card controls and reporting.
  • FLEETCOR has further enhanced our customer-facing materials and disclosures. The Company has taken steps, and will continue to take steps to modify its advertising, enhance disclosures regarding fees and improve its service to customers. Several of these enhancements have already been launched to the marketplace. We strongly disagree with the FTC’s assertion that our existing materials failed to meet market standards, and therefore do not believe redress is warranted.
  • FLEETCOR’s high level of customer satisfaction is demonstrated by low complaint levels relative to the size of its customer base and volume of interactions. Based on publicly-available data from the Better Business Bureau, we register approximately one complaint per 28,000 invoices (i.e., 0.0036%) within our U.S. fuel card business. This number is favorable compared to other card issuers. We feel the FTC’s broad categorization of our practices and our customers’ awareness of disclosures, which appears based on a relatively small number of customer complaints, is completely inappropriate.

The FTC investigation and allegations are directly related to FLEETCOR’s U.S. direct fuel card business within its North American Fuel Card business. This business generates approximately $600 million in annual revenue, with approximately 50% derived from card-accepting merchants and the remainder from business accounts. Of the revenue derived from business customers, approximately 50% is comprised of risk-related fees, such as late fees and finance charges, which are avoidable based on clearly defined customer behavior. An additional 20% of customer revenue is comprised of transaction fees charged to trucking companies, which is a well-known standard practice in the industry since the 1980s. The remaining 30% is comprised of fees related to program administration and optional services. We believe that further enhanced disclosures will have no material impact on our ability to bill and collect these fees going forward.

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.