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Citron Investigation Reveals FleetCor Fee Scheme, Bets It Could Get Into The Criminal Round

Citron Investigation Reveals FleetCor Fee Scheme, Bets It Could Get Into The Criminal Round

Citron Research is at it again.

Earlier this month, Andrew Left released a report denouncing FleetCor Technologies, Inc. (NYSE: FLT)'s allegedly fraudulent business practices and deceptive fee strategies, and in a Thursday follow-up, he posited whether the company will be charged civilly or criminally.

Through recent interviews with more than 25 former FleetCor employees, Left discovered a company algorithm determining how much it could cheat customers in junk fees before fielding complaints. Consumers were ranked on a color system based on their level of vulnerability and reactivity to abuse.

Additionally, the sources reported intentional misdating of payments, failure to check mail, theft of customer rebates, double-billing on services and insincere blaming of “computer problems,” among other offenses.

"Citron presents the obvious conclusion that FleetCor’s operations — in particular its fee-generating computer programs, result in clear, systemic violations of the FTC’s Section 5 ‘Unfair Practices,’” Left reported.

Related Link: Citron Research's Profanity-Filled Tweet Against Wayfair

Burying Evidence

Equally damning were records of FleetCor’s marketing adjustments following the last critical report.

“Since the Citron Report published the egregious details of FleetCor’s aggressive fee-charging strategy, FleetCor tried to remove all the ‘no fee’ language from the Fuelman marketing material,” Left wrote. “FleetCor’s government website no longer claims that the government will ‘Pay No Fees.’”

The analyst interpreted two motivations behind the removal. Either the company is anticipating a government investigation of its fees, or it's undergoing investigations by the attorney general or FTC for deceptive marketing.

“The question to ask yourself is: If FleetCor is willing to deceive its own government agency customers, imagine what they are willing to do to mom and pop business customers,” Left wrote. He announced an $80 price target on the stock.


In a call with Benzinga, Left expanded on his thesis.

"I actually personally bet it has a chance to get into the criminal round," Left said. "The only difference between criminal and civil in this case is does the CEO know. Is it willful or is it non-willful? Either way, there’s lawsuits waiting to happen.

"In my opinion, through the interviews, through the analysis that this is something completely contrived by management. This isn’t by chance, this isn’t just a few rogue employees jimmyjacking the system. This is a company that said we found ways to do this to circumvent the system with fine print and in their mind still be legal and compliant. They keep pushing the envelope to the point where it’s not compliant anymore, and that’s what I believe."

Left believes his Fleetcor thesis will play out much faster than USANA Health Sciences, Inc. (NYSE: USNA).

Fleetcor could not be reached for comment at time of publication.

The stock traded recently at $146.42, down about 3.3 percent on the day and down 6.5 percent over the last month.

Listen to Left's full interview with Benzinga:


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