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FedEx settles overcharging lawsuit

The company was accused of mislabeling deliveries to cheat companies and government offices out of millions

News that FedEx has reached a settlement over alleged overcharging sent shares of the company soaring last week.

The company faced ongoing allegations that FedEx “systematically overcharge[ed]” commercial and government clients by mislabeling commercial shipments as residential deliveries, which allowed it to collect higher surcharges.

The claims first came to light in in a breach of contract suit brought by two law firms who purportedly suffered from the overcharging. Last year, lawyers also filed a complaint under the Racketeer Influenced and Corrupt Organizations Act, which could have resulted in the company being forced to pay triple damages. The terms of the settlement have not yet been disclosed.

The stock increase was also fueled by speculation that Bill Ackman, who runs the $12 billion Pershing Square hedge fund, may be looking to acquire a part of the delivery company, Fox Business reports. Ackman announced last week that he is starting a new $1 billion fund to invest in as-yet-unknown large-cap company.  

For more InsideCounsel coverage of FedEx, see:

FedEx employee says company overcharges businesses, government offices

Accent-related discrimination suits on the rise, says EEOC

FedEx to pay $3 million in discrimination case

FedEx to pay U.S. $8 million over delayed deliveries it blamed on security

Alanna Byrne

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