In a sometimes blistering affirmation of a lower court finding, a federal circuit court of appeals found that fuel card provider Corpay had undertaken several practices in its product offerings that could be viewed as deceptive and misleading.
The Eleventh Circuit Tuesday upheld a series of injunctions handed down by the U.S.District Court for the Northern District of Georgia in 2022. That decision came out of a 2019 lawsuit filed by the Federal Trade Commission against Corpay, which is the current name of the company that had been known as FLEETCOR (NYSE: PAY).
In August 2022, the district court handed down summary judgement and a permanent injunction against Corpay for several of the practices the FTC had accused it of implementing.
“The evidence against Corpay is overwhelming, and the company has not created a genuine dispute of material fact to preclude summary judgment against it,” the 11th Circuit said in a unanimous three-judge decision.
The court also upheld summary judgment against CEO Ronald Clarke, who has headed the company since 2000. However, one of the summary judgment counts against Clarke was dismissed by the appellate court.
“In the United States, we say…’all hat and no cowboy,’” the court said in its opening paragraphs. “We’d mean all talk and no substance, or something looks much better than it really is.”
That was the view the FTC held of some of the promises Corpay made to its fuel customers, the court said. “For years, Corpay marketed itself as offering large and small businesses fuel credit cards that promised savings, control and transparency. Yet when the FTC looked under the hat, it found no cowboy.”
Instead, the court said in summarizing the FTC charges, Corpay was implementing “hidden charges, misleading practices and broken commitments.”
The lower court granted summary judgment against both Corpay and Clarke in favor of the FTC. It also handed down permanent injunctive relief against Corpay that would require a large range of disclosures regarding terms and conditions for its fuel card customers, and that they be made more transparent.
In one particularly brutal passage by the appellate court, the three judges discuss a Corpay claim for one of its cards that it had “no transaction fees.” But there were other fees connected to the card: a Convenience Network Surcharge, a Minimum Program Administration Fee and High Risk Pricing.
“Corpay argues that a reasonable jury would find that customers would understand the term ‘transaction fee’ as a fee charged by a company per every transaction,” the appellate court writes. Corpay further argues, according to the judicial panel, that these fees were no “transaction fees.”
Nonsense and baloney
“We think that’s nonsensical,” the judges write. The court says Corpay, in internal documents, referred to two of those fees as “transaction fees.”
“We can slice the baloney only so thin,” the judges write “A fee called a ‘transaction fee’ that is charged per transaction is a transaction fee.”
“No reasonable fact finder could conclude that Corpay did not charge ‘transaction fees,’” the court wrote in granting summary judgement on that FTC charge.
The other specific counts lodged by the FTC against Corpay cover several practices the company implemented.
Per gallon advertisements: A series of promised fuel discounts depending on what program a card user signs up for in reality had benefits less than what was promised. The amendments to the program were disclosed in Corpay advertisements, the judges said, “in fine print at the bottom of the ad.” In some cases, the discount program wasn’t offered at brands that were highlighted in the ad, also disclosed in the fine print.
Fuel only ads: This would be important to users so that their employees couldn’t purchase non-fuel products with the card. Corpay did show evidence it stopped many non-fuel purchases. But they didn’t get all of them: one customer said a fuel only Corpay card was used to buy $206,688.05 in Safeway gift cards.
Two specific charges of unauthorized fees: These were for fees beyond the charges that were part of the court’s description of Corpay’s arguments as “nonsensical.” They went under the names of FleetAdvance and FleetDash, Fraud Protector, Accelerator Rewards, and the Clean Advantage Program. “The FTC uncovered evidence that Corpay didn’t make customers aware of these fees in advance,” the court said. “Internal emails and customer complaints showed that Corpay did not mention these fees to customers during the sales process.” In one embarrassing incident, the court says that in March 2016, “Copay employees sent panicked emails when a fee was included on an invoice instead of the Fuel Management Report.”
Erroneous Late Fees: This recap is particularly damning. Evidence on late fees at Corpay “suggested these failures were intentional,” the court wrote. “In a 2017 email, for instance, CEO Clarke asked employees for ‘opportunities to get more late fee revenue in 2018 . . . thru a higher rate, less/no grace days, etc, etc.’ Along these same lines, a former Corpay revenue analyst testified that the Vice President of Revenue Management told her that Corpay didn’t make it easy for customers to pay electronically “because doing so would reduce late-fee revenue.”
The count against Clarke is that he was “personally liable for the company’s conduct.”
No money assessed
A move by the FTC for “monetary relief” was not granted by the district court or the appellate court on the basis of an earlier precedent.
The list of steps Corpay needs to take to compensate for the various counts and the summary judgement findings is a long one.
There are requirements that Corpay must not charge for add-on products “without first securing a customer’s Express Informed Consent to charge for each particular add-on product or service charged.”
There is a prohibition against “deceptive claims.” The ruling in the lower court is broad, touching on a wide variety of card applications, including whether a use is free or whether there are charges connected.
To deal with the charge that the company sought to levy as many late fees as it could, the lower court ruling was that it must “credit electronic or online payments to consumers’ accounts effective as of the date the consumers submit their payments.”
The mandates continue on after that covering a lengthy number of compliance standards that must be met.
What the company said in 2022
Corpay had not responded to a request for comment from FreightWaves by publication time.
In August 2022, when the lower court ruling had come down, the company (FLEETCOR then) said it “strongly disagreed” with the ruling.
“Beginning in 2017, FLEETCOR voluntarily cooperated with the FTC and implemented enhanced disclosures addressing the concerns raised by the FTC,” the company said. “The Company has seen no material business impact or change in customer behavior as a result of these changes.
In that prepared statement, Steve Stull, the company’s lead independent director, said FLEETCOR “takes governance and oversight matters seriously and is confident it has acted in accordance with all applicable laws.”
More articles by John Kingston
How is C.H. Robinson using AI? Its CFO has a story
Benesch panelists: Why 2026 could be a strong year for logistics M&A
3-way combo emerges for digital load matching: DAT, AscendTMS and Convoy
The post FTC charges against fuel card provider Corpay held up on federal appeal appeared first on FreightWaves.
