ATLANTA–(BUSINESS WIRE)–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.
About FLEETCOR
FLEETCOR Technologies (NYSE: FLT) is a leading global business payments company that simplifies the way businesses manage and pay their expenses. The FLEETCOR portfolio of brands help companies automate, secure, digitize and control payments on behalf of, their employees and suppliers. FLEETCOR serves businesses, partners and merchants in North America, Latin America, Europe, and Asia Pacific. For more information, please visit www.FLEETCOR.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws. Statements that are not historical facts, including statements about FLEETCOR’s beliefs, expectations, assumptions and future performance, are forward-looking statements. Forward-looking statements can be identified by the use of words such as “anticipate,” “intend,” “believe,” “estimate,” “plan,” “seek,” “project,” “expect,” “may,” “will,” “would,” “could” or “should,” the negative of these terms or other comparable terminology. Examples of forward-looking statements in this press release include statements about FLEETCOR’s beliefs, expectations and assumptions with respect to the lawsuit filed by the FTC, FLEETCOR’s intentions with respect to challenging such lawsuit and the potential impact of such lawsuit. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those contained in any forward-looking statement, such as adverse outcomes with respect to current and future legal proceedings, including, without limitation, the FTC lawsuit, or actions of governmental or quasi-governmental bodies or standards or industry organizations with respect to our payment cards; fuel price and spread volatility; the impact of foreign exchange rates on operations, revenue and income; the effects of general economic and political conditions on fueling patterns and the commercial activity of fleets; changes in credit risk of customers and associated losses; failure to maintain or renew key business relationships; failure to maintain competitive product offerings; failure to maintain or renew sources of financing; failure to complete, or delays in completing, anticipated new partnership and customer agreements or acquisitions and to successfully integrate or otherwise achieve anticipated benefits from such partnerships and customer arrangements or acquired businesses; failure to successfully expand business internationally, other risks related to our international operations, including the potential impact to our business as a result of the United Kingdom’s referendum to leave the European Union, risks related to litigation, the impact of new tax regulations and the resolution of tax contingencies resulting in additional tax liabilities; as well as the other risks and uncertainties identified under the caption “Risk Factors” in FLEETCOR’s Annual Report on Form 10-K for the year ended December 31, 2018 and subsequent filings made by FLEETCOR with the Securities and Exchange Commission. These forward-looking statements are not a guarantee of performance, and undue reliance should not be placed on such statements. The forward-looking statements included in this press release are made only as of the date hereof, and FLEETCOR does not undertake, and specifically disclaims, any obligation to update any such statements as a result of new information, future events or developments except as specifically stated in this press release or to the extent required by law.
