FedEx employee says company overcharges businesses, government offices

In unsealed email, sales exec says he tried to bring the problem to the company’s attention for years

Alan Elam thinks it’s wrong to rip people off. So when he discovered that his employer, FedEx Corp., was overcharging some of its customers, he tried to do the right thing.

In emails to his superiors, Elam, a FedEx sales executive, said he believed FedEx was “systemically overcharging” customers by billing businesses and government offices at higher residential rates. Elam’s emails were unsealed yesterday in a class action claiming that FedEx violated federal civil racketeering laws by overcharging commercial and government customers as much as $3 per package for millions of packages. The plaintiffs in the suit seek three times the amount of the alleged overcharges. They also seek an injunction barring FedEx from charging commercial customers at residential rates.

It’s clear from the emails that Elam was frustrated by the lack of interest in his concerns. “I have brought this to the 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,” he wrote in an August 2011 internal email. In another email, he wrote that he believed FedEx was “choosing not to fix this issue because it is worth so much money to FedEx.” He also told his superiors that the problem was “a huge class action lawsuit waiting to happen.”

One of Elam’s superiors, FedEx Senior Vice President for Sales Daniel Mullally, responded to one of Elam’s emails by saying that he hadn’t been aware of the overcharging problem but understood the “gravity of the situation.” He wrote that he would get the Solutions, Customer Service and Billing departments involved. Chris Suhoza, vice president of solutions, wrote to Elam and Mullally that Elam’s concerns “have not gone unheard. We are working this customer experience issue through.”

“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,” the plaintiffs said in their amended complaint filed yesterday.

Read Bloomberg Businessweek for more information.

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