April 27, 2017

Citron Exposes the Dirty Illegal Secrets of

FleetCor. Also, Proof the Company is
Already in Cover-Up Mode.

Short Term Price Target = $80

In our first report Citron referred to FleetCor (NYSE:FLT) as FeeCor and

FleeceCor. The bulls defended the company, claiming FleetCor's
customer fees are legal, not egregious, and most of all are sustainable.
In this report Citron clarifies the illegality of FleetCor's corporate practices,
and the lengths the analyst community goes to in defending them.

Citron Explains FleetCor April 27, 2017 Page 1 of 14

Why the Quarter Doesn't Matter
1) No need for an "Internal Investigative Review"...
We Did One, and This is What we Found.
After interviewing over 25 former employees, Citron now knows that
FleetCor has developed a deep learning algorithm to intentionally cheat its
customers with junk fees.
No two customers are billed exactly alike, yet all customers are fitted into a
profile / classification based on how many fees can be extracted without
complaints. FleetCor classifies Red, Yellow and Green customers
based on its internal algorithmic analysis of how vulnerable the customers
are to this type of gouging without detecting it or complaining.
Citron believes that federal and state regulators and state attorneys
general will be laser-focused on the computer system operating at
FleetCor, which pro-actively discriminates against their own customers.
This includes the government and non-profits.
The internal systems at FleetCor are designed to deceive their customers.
The company acts as though they believe they are protected by small print
in their contracts. That verbiage will eventually hold no weight in the civil
and potential criminal lawsuits that we believe will inevitably follow.
Through our extensive interviews we have heard the tales of:
Placing wrong dates on payments
Not checking mail on timely schedule
Stealing rebates from customers
Double-billing for the same service
Intentionally bad customer service
Blaming "computer problems"
A corporate culture underpinned by deceit

No reason for some bullshit internal review. Even your analysts

understand the corruption. The question is when will it stop.
Morgan Stanley's investment thesis is basically "You can't catch them".

Citron Explains FleetCor April 27, 2017 Page 2 of 14

Why the Quarter Doesn't Matter
 The FTC is more concerned with consumer protection than B2B (e.g.
the Truth in Lending Act doesn't apply)
FTC is more interested in broad industry practices rather than an
individual company FTC's decision to "work with" FLT or go straight
to a formal CID (or worse, a federal search warrant) depends on the
perceived legitimacy of the business,
A bear case might include FLT terminating employees, which ...
might stimulate further interest and prompt the FTC to interview the
terminated employees for details on firm practices.

So" it's a risk factor that the FTC might interview former employees?
What is this, the Sopranos???

Yes Investors, Laws and Regulations Do Apply

Many of the bullish analyst reports on FleetCor rest on the myth that
FleetCor can skirt the particulars of FTC regulation because its main product
is not a credit card. The argument goes that this product lives outside the
scope of regulation. Yet in FleetCor's own words (10-K) we read:

Federal Trade Commission Act:

All persons engaged in commerce, including, but not limited
to, us and our bank sponsors and customers are subject to
Section 5 of the Federal Trade Commission Act
prohibiting unfair or deceptive acts or practices
Various federal and state regulatory enforcement agencies
including the Federal Trade Commission (FTC), Consumer
Financial Protection Bureau (CFPB) and the state
attorneys general have authority to take action against
businesses, merchants and financial institutions that
engage in UDAAP or violate other laws, rules and
regulations. If we violate such laws, rules and regulations,
we may be subject to enforcement actions and as a result,
may incur losses and liabilities that may impact our
business.

Citron Explains FleetCor April 27, 2017 Page 3 of 14

Why the Quarter Doesn't Matter
Citron presents the obvious conclusion that FleetCors operations -- in
particular its fee-generating computer programs, result in clear, systemic
violations of the FTCs Section 5 Unfair Practices.

Unfair Practices
An act or practice is unfair where it
causes or is likely to cause substantial injury to consumers;
cannot be reasonably avoided by consumers; and
is not outweighed by countervailing benefits to consumers or to
competition.

Deceptive Practices:
An act or practice is deceptive where
a representation, omission, or practice misleads or is likely to
mislead the consumer;
a consumers interpretation of the representation, omission, or
practice is considered reasonable under the circumstances; and
the misleading representation, omission, or practice is material.

After reading this report, we challenge anyone to reasonably conclude that

regulators or customers will allow FleetCor's purposeful, organization-wide,
systemic, deceptive fee generation practices to continue.

Up until two weeks ago all of FleetCor's Fuelman Credit Cards were
marketed to governmental agencies as:

Pay No Fees- No Set Up, Transaction, or Annual Fees

as shown in the page below. Thank you, Wayback machine!
Citron Explains FleetCor April 27, 2017 Page 4 of 14
Why the Quarter Doesn't Matter
 https://web.archive.org/web/20170404224933/http://www.fuelman.com/government-agencies.aspx

Since the Citron Report published the egregious details of FleetCors

aggressive fee-charging strategy, FleetCor tried to remove all the no fee
language from the Fuelman marketing material.

FleetCors government website no longer claims that the government will

Pay No Fees.
http://www.fuelman.com/government-agencies.aspx
http://www.fuelman.com/fuelman-advantage-mastercard-details.aspx
For FleetCor to change such a core piece of their marketing pitch on their
Citron Explains FleetCor April 27, 2017 Page 5 of 14
Why the Quarter Doesn't Matter
own website could be the sign of either:
Impending Government Probe of their Fees
Attorney General Investigations
FTC Inquiry/Investigation into deceptive marketing

Yet this effort is too little too late, as the internet is still riddled with
marketing material saying no fees ..like this

From the FAQ on Fuelman Public Sector Fleet Card

Are there any usage fees?
The Fuelman Public Sector fleet card has no set up, card or membership
fees. If applicable, there is a 1% tax filing fee that will cover the cost of
your tax administration. "
http://www.fleetcardsusa.com/faq.aspx?productID=15#faq_126

This of course is total deception! It will be especially fun watching the

company remove this one soon ... but it will remain on archive.org!
What is their cockamamie internal review going to say about that?
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

Citron Explains FleetCor April 27, 2017 Page 6 of 14

Why the Quarter Doesn't Matter
3) What is FleetCor Hiding in the Fine Print?

FleetCorp has built its business on systematically deceiving its own

customers for years. It is now so bad it has become IMPOSSIBLE to use its
product without being subject to random escalating fees.
Unlike other card companies, FleetCor customers do not receive terms and
conditions when they apply for the card; instead they receive this small
print brochure. Here is a PDF link to the actual size of these disclosures,
which are so small they might as well be written in invisible ink.

Click to see what this looks like in real-life full size print!
/wp-content/uploads/2017/04/Fuelman-Scan-of-actual-size.pdf

Other credit card companies terms and conditions are available upon
application and are printed to be legible in a reasonable sized font.
https://www.onlinecreditcenter6.com/eapplygen2/load.do?cHash=38521181415&subActionId=
1000&langId=en&intcmp=chevrontexacoapplyplcc

Citron Explains FleetCor April 27, 2017 Page 7 of 14

Why the Quarter Doesn't Matter
What are they hiding?? EVERYTHING! Pour yourself a stiff
drink, get out your magnifying glass, and take a hard look at the
real FeeCorp.

Just To Get Your Card there is a Fee (sounds like a setup or

annual fee to us)
3.8 Administration of Account. Fuelman Fuelman reserves the right
to charge a fee of up to fifty dollars ($50.00) a month or a minimum of
fifteen dollars ($15.00) per Billing Cycle for account administration.

If you want to use your card there could be a fee

3.9 Card Fees. Fuelman reserves the right to charge a service fee of up
to ten dollars ($10.00) per Card per month to support the use of the Card.

If you do not use your card there could be a fee

3.11 Inactive Cards. Fuelman reserves the right to charge a fee of up
to three dollars and fifty cents ($3.50) per Billing Cycle for Cards that are
inactive for seventy-five (75) or more days.

When you make a transaction there could be a fee

9.8 Minimum Program Administration Fee. Under circumstances
where the previous months average fuel price (defined as the U.S. Regular
Gasoline Price by the U.S. Energy Information Administration) is below
$3.25 dollar per gallon, we may charge a Minimum Program
Administration Fee of up to 10 cents per gallon or $2 per transaction to
cover ongoing program operations costs.

All the following fees are assessed in the context of paying your bill.

Citron Explains FleetCor April 27, 2017 Page 8 of 14

Why the Quarter Doesn't Matter
 If you want to pay by check there could be a fee
10.5.1 Client Check. ...Fuelman reserves the right to charge an
Exception Handling Fee of ten dollars ($10.00) for processing the payment.
Fuelman reserves the right to charge a Check Processing Fee of fifteen
dollars ($15.00) per check payment.

If you want to pay by phone there could be a fee

10.5.3 Pay by Phone. Fuelman reserves the right to charge a fee up to
thirty dollars ($30.00) for processing each Pay by Phone payment using
either methods.

If you want to pay by Credit Card there could be a fee

10.5.4 Fuelman reserves the right to charge a credit card convenience
fee up to three percent (3%) of the payment amount.

If you want the money to come right from your bank

account there could be a fee
10.5.5.1 Debits to Bank Account. Fuelman reserves the right to charge a
bank handling fee of up to twenty five dollars ($25.00) per debit of the
Clients Bank Account.

If you pay EFT/ECH there could be a fee

10.5.6 Client Initiated Electronic Funds Transfer/Automated
Clearinghouse . Fuelman reserves the right to charge a fee of up to fifty
dollars ($50.00) for processing each Client initiated EFT/ACH.

Is it possible to pay your bill without a fee??? Bitcoin? Gold

Bullion? Maybe a bag of cash dropped at their offices?

Citron Explains FleetCor April 27, 2017 Page 9 of 14

Why the Quarter Doesn't Matter
 But at least for all these fees I get fleet management
reports! Yes you do ..for a fee.
11.4 Fuelman reserves the right to charge Client a fee of up to fifteen
dollars ($15.00) for delivering each of these optional reports or up to one
hundred dollars ($100.00) per quarter.

If you want to complain or dispute these feesdont call or email!

All complaints must be submitted within 15 days by mailyes,
snail mail.
15.1 Disputed Transactions. To dispute any Transaction on Clients
Statement, Client must notify Fuelman in writing as set forth below within
fifteen (15) days of the date of Clients Statement. Fuelman will promptly
investigate the matter and respond to Client within sixty (60) days after
receiving written notice. Notice should be sent to: FUELMAN, P.O. Box
924138, Norcross, GA 30010, Attention: Customer Service.

The above is just an example of some of the fees that FleetCor imposes on
its customers. There are many more. Notice the words in the disclosure
reserves the right to charge vs. a simple "will be charged."

4) You Want Your Rebate? Fuggedaboudit!

Of all the disclosures, the one that is most disturbing is REBATES!
The only persuasive economic incentive for customers to acquire fuel cards
is the promise that aggregating fuel purchases can avail them of volume
fuel rebates. This is the raison detre of fuel cards. But needless to say,
rebates under FleetCor also have their fees and fine print. After the
expected rebate fees and out-clauses, we read one disclaimer that
demonstrates FleetCors ability to screw its customers in black and white.

Rebate/Volume Discount

Citron Explains FleetCor April 27, 2017 Page 10 of 14

Why the Quarter Doesn't Matter
 Rebate? Or Bait and Switch?

For this we read in the small print

". Under circumstances where the previous months average fuel price
(defined as the U.S. Regular Gasoline Price by the U.S. Energy Information
Administration) is below $3.25 dollars per gallon, we may change,
suspend, or terminate this rebate program without notice."

$3.25 a gallon??? That means that FleetCor has reserved for itself the
ability to opt out of paying rebates since October of 2014. Do they disclose
this anywhere to any of their customers?
By the way, no other player in the fuel card industry does this! A FleetCor
exclusive!
https://www.eia.gov/dnav/pet/pet_pri_gnd_a_epmr_pte_dpgal_m.htm

Another of FleetCor devious schemes is to switch customers into "Level 2"

pricing without their knowledge. This has devastating effects on customer
costs, and demands customers waste enormous amounts of time verifying
individual gas receipts to even notice. Refer to excellent reporting by The
Capitol Forum for full details.

Citron Explains FleetCor April 27, 2017 Page 11 of 14

Why the Quarter Doesn't Matter
The Sell Side Really Wants to Invoke BBB to Defend
FleetCor?
FleetCors actions are best explained in a Better Business Bureau post from
THIS MONTH:

Watch your invoices. They are always adding fees and charges for
items not requested or signed up for. Yes, they will remove them if you
notice and call them up. Of course they say, pay the full invoice so you
won't have any fees or late charges and they will credit you back the
next month. I have received interest charges for late payments despite
paying on time.

* Note that despite the sell side touting that FleetCor has an "A" rating
with the BBB, this has nothing to do with the business, but merely the
attention the company gives to published complaints. (Last year the
company had an F). It is amateurish how the sell side references FleetCor's
BBB grade letter to defend the company, while ignoring the content from
volumes of clearly written customer complaints, which all support the facts
in this report.

What is FleetCor Worth? A fair and reasonable analysis

In FY 2016, FleetCor generated $1 billion of net revenues from customer
fees -- not including merchant fees or interchange fees. This is the revenue
generated by all of the "junk fees" mentioned above.
In our model below, we assume a 75% margin from fees (which is generous,
its probably more like 90%.) If customer (junk fees) get reduced by a
mere 25% and FLT trades at a EV/EBITDA multiple of 14x like Wex, its
nearest competitor, FLT stock trades at $76.
And this is without any regulatory or criminal action taken against the
Company or its management. This calculation doesn't even account for
customer rebates that are being confiscated due to predatory late payment

Citron Explains FleetCor April 27, 2017 Page 12 of 14

Why the Quarter Doesn't Matter
terms, such as $3.25 per gallon minimum restriction imposed by FuelMan
cards, in lieu of actual rebates customers could be receiving.

Citron Explains FleetCor April 27, 2017 Page 13 of 14

Why the Quarter Doesn't Matter
 Conclusion

The only question Citron has regarding FleetCor is

When the shit hits the fan, will the case stay civil or
will it go criminal?
Are we simply looking at unfair deceptive trade
practices or is this theft by fraud?

We can tell you .for a fee.

Cautious Investing to All! ( <--- Some no-fee advice! )

Citron Explains FleetCor April 27, 2017 Page 14 of 14

Why the Quarter Doesn't Matter