Fedex overcharged customers for years, internal email says
Businesses, government paid higher rate: lawsuit
FedEx Corp. has been “systematically overcharging” customers by billing businesses and government offices at higher residential rates, a company sales executive said in an internal email unsealed in a lawsuit.
“I have brought this to attention of many people over the past five or six years, including more than one managing director, and no action has been taken to address it,” Alan Elam wrote in an email on Aug. 2, 2011. “My belief is that we are choosing not to fix this issue because it is worth so much money to FedEx,” he said in a separate email that day.
The emails were unsealed in a class-action, or group, lawsuit claiming FedEx Corp. and FedEx Corporate Services Inc. overcharged commercial and government customers as much as $3 each for millions of packages delivered. The plaintiffs, who claim violations of federal civil racketeering laws, seek three times the amount of the alleged overcharges.
“We allege that FedEx has and continues to engage in a pattern of intentionally charging its customers residential delivery fees for deliveries to obviously non-residential addresses such as courthouses, government offices and banks,” Steven J. Rosenwasser, a lawyer for the plaintiffs, said in an interview.
FedEx, based in Memphis, Tenn., has charged residential rates for deliveries to the U.S. Citizenship and Immigration Office, Bank of America Corp., Toyota Motor Credit Corp. and the National Passport Processing Center, according to the amended complaint filed Monday in the lawsuit.
“Perhaps most telling, on at least 70 separate occasions, FedEx improperly charged a residential de- livery surcharge to its customers for deliveries to FedEx’s own headquarters,” according to the complaint.
The lawsuit, filed in federal court in Memphis in 2011 seeking to represent a national class of consumers, also asks for an injunction barring FedEx from charging commercial customers at residential rates. The Elam emails were among 11 documents unsealed and attached to the amended complaint yesterday.
“These 11 documents do not tell the entire story of this case,” Sally Davenport, a FedEx spokeswoman, said in an email Tuesday. “We will continue to defend these allegations in a court of law and not the media.”
FedEx customers with billing concerns can seek refunds by going online at fedex.com or by calling 1-800-GoFedEx, Davenport said. “FedEx built its reputation on awardwinning customer service.”
The Elam emails point to the company’s internal knowledge of overcharging, lawyers suing the company said. They were initially classified by FedEx as confidential and unsealed by court order Monday.
“Defendants’ own internal documents prove that defendants have known for years that they are unlawfully charging residential surcharges when they do not apply, but have permitted the unlawful surcharges to continue because they generate substantial illicit profits,” Rosenwasser and other plaintiffs’ lawyers said in the amended complaint.
Elam said he became aware of a problem in 2008, according to the emails. “It became clear to me at this time that we had a systemic problem that was likely causing overcharges for thousands of our customers, and that the dollar value was huge,” Elam wrote in an Aug. 12, 2011, email to Daniel Mullally, FedEx senior vice-president for sales.
Elam said he brought the issue to the attention of three of his superiors, including his managing director. “In conversations with each, I used the language, ‘This is a huge class-action lawsuit waiting to happen.’ None of them have ever reported back taking any action to elevate this issue,” Elam wrote.
In a prior email attached to this string, Mullally told Elam that he didn’t know about any possible overcharging.