FleetCor presented its growth as a result of the company’s “geographic reach,” good products, lower billings, customer satisfaction, and good sales force, among other things. These claims were false, says the complaint for this class action, and violated the Securities Exchange Act of 1934.
The class for this action is all those who bought FleetCor securities between February 5, 2016 and May 2, 2017.
FleetCor offers workforce payment products such as fuel cards to small businesses and government and corporate customers. Fuel cards purportedly save users money, limit expenses, and minimize unauthorized transactions. The company’s largest US fuel partner was Chevron/Texaco.
During the class period, the company made public statements attributing its rising revenues to a number of things:
But the complaint for this class action alleges that its revenues were based on very different things:
The most striking accusation is that FleetCor classified customers according to the amount of unwarranted fees the company could charge them—in other words, according to how much mistreatment they would take.
Chevron/Texaco announced on December 19, 2016 that it had terminated its relationship with FleetCor. In May 2017, it filed a suit against FleetCor in Texas state court, which Citron Research claims indicated that FleetCor was mistreating Chevron’s customers.
In the meantime, reports and articles had begun appearing on FleetCor.
In March 2017, Capitol Forum published an article claiming that FleetCor imposed a “myriad of unwarranted fees on customers” by understating or misrepresenting the fees for its products, waiving fees during the first three months when customers are most alert to their bills, and burying fees at the end of long transaction reports, and that it only removed the fees when “customers [were] both persistent and vocal in raising objections.” It also alleged that FleetCor deliberately cashed customer payment checks late, so that it could charge late fees.
The following month, Citron Research published a similarly negative article, alleging that FleetCor was a “predatory company by design” using business practices that were “designed to deceive.”
As each of these pieces of news emerged, FleetCor’s stock price fell, causing losses to investors.