FTC allegations against fuel card company Corpay remain upheld after federal appeal

Federal Appeals Court Confirms Corpay Engaged in Misleading Practices

A federal appeals court has strongly affirmed a previous lower court ruling, determining that Corpay, a provider of fuel cards, engaged in actions that could be considered deceptive and misleading in its product offerings.

On Tuesday, the Eleventh Circuit upheld several injunctions issued by the U.S. District Court for the Northern District of Georgia in 2022. These rulings stemmed from a 2019 lawsuit brought by the Federal Trade Commission (FTC) against Corpay, formerly known as FLEETCOR (NYSE: PAY).

In August 2022, the district court granted summary judgment and imposed a permanent injunction on Corpay for multiple practices identified by the FTC as problematic.

The appellate court, in a unanimous decision, stated, “The evidence against Corpay is overwhelming, and the company has not raised any genuine dispute of material fact to prevent summary judgment.”

The court also maintained summary judgment against CEO Ronald Clarke, who has led the company since 2000, though one count against him was dismissed.

“In the United States, we say… ‘all hat and no cowboy,’” the court remarked, describing situations where appearances are deceiving. The FTC viewed Corpay’s promises to its fuel card customers in this light, noting that while Corpay advertised savings, control, and transparency, the FTC found these claims unsubstantiated.

The court summarized the FTC’s allegations, stating that Corpay engaged in “hidden charges, misleading practices, and unfulfilled promises.”

The lower court’s summary judgment in favor of the FTC required Corpay to implement broad disclosures about its fuel card terms and conditions, ensuring greater transparency for customers.

Questionable Fee Practices

The appellate court highlighted a particularly egregious example: Corpay claimed one of its cards had “no transaction fees,” yet customers were subject to fees such as a Convenience Network Surcharge, a Minimum Program Administration Fee, and High Risk Pricing.

Corpay argued that customers would interpret “transaction fee” narrowly, but the court found this reasoning unconvincing, noting that Corpay itself referred to some of these charges as “transaction fees” in internal documents. The judges concluded, “A fee called a ‘transaction fee’ that is charged per transaction is a transaction fee.”

The court determined that no reasonable fact finder could conclude Corpay did not impose transaction fees, supporting the FTC’s claims.

Other FTC Allegations Against Corpay

• Per Gallon Discounts: Corpay advertised fuel discounts that were often less than promised. Details and limitations were buried in fine print, and some discounts were not available at the brands featured in the ads.
• Fuel-Only Card Claims: While Corpay claimed its cards could only be used for fuel, some customers were able to make non-fuel purchases, including one instance where over $200,000 in gift cards were bought with a “fuel only” card.
• Undisclosed Fees: The FTC found that Corpay charged additional fees under names like FleetAdvance, FleetDash, Fraud Protector, Accelerator Rewards, and Clean Advantage Program, without properly informing customers during the sales process.
• Improper Late Fees: Evidence suggested Corpay intentionally made it difficult for customers to avoid late fees. Internal communications revealed efforts to increase late fee revenue, including reducing grace periods and discouraging easy electronic payments.

CEO Clarke was found personally responsible for the company’s actions.

No Financial Penalties Imposed

Although the FTC sought monetary relief, both the district and appellate courts denied this request based on prior legal precedent.

Corpay faces a comprehensive set of requirements to address the court’s findings. These include obtaining explicit customer consent before charging for add-on products or services and prohibiting deceptive statements about fees or free usage.

To address the issue of excessive late fees, Corpay must now credit electronic or online payments to customer accounts as soon as payments are submitted.

The court’s mandates extend to numerous compliance obligations that Corpay must fulfill moving forward.

Corpay’s Response

Corpay did not provide a comment to FreightWaves by the time of publication.

After the 2022 district court ruling, the company—then operating as FLEETCOR—expressed strong disagreement with the decision. Corpay stated that since 2017, it had voluntarily worked with the FTC and improved its disclosures, claiming these changes had no significant impact on its business or customer behavior.

Steve Stull, the company’s lead independent director, emphasized in a prepared statement that FLEETCOR takes governance and oversight seriously and believes it has complied with all relevant laws.