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I'd encourage a bit more skepticism to this article. While this accusation could possibly be true, there are two things to keep in mind, which I am sharing having experience as a founder/CEO who has gone from startup to IPO:

1) This is taken from a complaint in a class action lawsuit. Class action lawyers are very similar to patent trolls whereby they can spin almost any story they want. And journalists go for clicks, so they amplify the sensationalism. It doesn't mean this is one of those, but a class action complaint should not just blindly be trusted.

2) There is a strong theme of "of course execs lie cheat steal at every turn" and I also think this narrative should be questioned. Ethics aside, the level of compliance in a public company is insanely high. Execs are already rich. To risk jailtime, which fraud can lead to, you'd need to see something more existential than slightly increasing margins on used van sales.

I felt inclined to comment as I've been on the other end of articles like this, and it is astounding the level of mind reading people have done into my intent and actions on things that were factually just not true at all. I also truly would find it very difficult to commit a broad organizational fraud even if I wanted to and my company is only 500 people.

If I had to make a prediction, the case is less black and white than it appears, and if there was fraud, it was probably committed at a non-executive level by the person whose P&L was directly tied to these resales. Or, it was done independently by the much smaller leasing company where this was more existential to them. It is highly unlikely to be a Fed Ex executive-level conspiracy.

I'm sure there are a few counter examples, such as say the VW emissions scandal, but I would counter these were the exceptions that proved the rule and in general when the C-level was involved was much higher stakes.

Helpful perspective. As a lawyer who has worked on both sides of class actions, I generally classify these cases in four categories:

-Legit cases that describe (or at least ultimately lead to finding) clear and meaningful wrongdoing. There's always some room for arguing one way or the other but ultimately there's some clarity that something meaningfully wrong happened. I think these are probably ~3-5 percent of cases filed. These cases tend to settle relatively early for high dollar figures.

-Cases of clear but unimportant wrongdoing. Technically a statute was violated, but no one was really hurt at all. These tend to settle for small $ figures. Perhaps 20% of cases.

-Important but unclear wrongdoing (evidence supports either finding; among one million documents, some look really bad, while others look very exculpatory). These stick around for a long time and ultimately earn lawyers a lot but cost the parties, on average, a lot of money to litigate. Perhaps 30% of cases.

-Complete/fabricated nonsense and/or fishing expeditions. Cost defendants a fair amount (and brutal for small defendants), but not the end of the world for big defendants. Perhaps 50% of cases.

> VW emissions scandal

VW is in the business of selling vehicles, and has a real interest there to push the envelope as much as possible.

FedEx is not in the business of selling used vehicles. These vehicle sales likely don't impact their core business in the slightest - making an organization-wide scandal just silly to even think about.

Looking online, these types of "vans" sell for anywhere between $5,000 and $30,000 (with 4 digit miles)[1]. Seriously... FedEx isn't going to blink at any of this.

These class actions are always brought by bottom-feeding lawyers that use serial-plaintiffs. The reality is the class action bit will be retracted, and the lawyers, err, plaintiff will receive a "go the hell away please" payment. That's the game here...

[1] https://www.auctiontime.com/listings/trucks/auction-results/...

> Execs are already rich. To risk jailtime, which fraud can lead to, you'd need to see something more existential than slightly increasing margins on used van sales.

This seems incredibly naive. You'd have to be willfully ignorant to think that a) rich people won't break the law to make a tiny bit more money, and b) fraud committed by large corporations often results in jail time.

I agree with you that this article isn't worth very much, but that's only because lawsuits in general shouldn't be trusted without corroborating evidence, not because a rich executive would never do this.

I understand your defensiveness, but the article did not even imply that the CEO was directly implicated. That said, I think it is still at some level their responsibility if this fraud turns out to be true; “the person whose P&L was directly tied to these resales” still had ever stricter OKR’s they had to answer for, and apparently no double-checking or auditing was done because that person’s boss didn’t want to know. They were rewarded for numbers going up and to the right, as was their boss, as was their boss, up to the CEO.

Sorry, I just tire of narratives where when a corporation does something morally wrong, it’s the fault of nebulous capitalist hyper-optimization and no individuals are held accountable.

Even if you turn out to be flat wrong, I still appreciate the level-headedness to consider how we got to this point and the urging we all slow down a bit before we all march on FedEx headquarters.
A few counter examples. Lol.

Asbestos in talcum powder. PFAS exposure and dumping into public water supplies. Monsanto and roundup. Cigarettes health effects. Climate change from burning hydrocarbons. Norfolk southern and the controlled burn in east palistine. I could literally go on and on about the history of execs poisoning people and the planet while knowing full well about it. All to keep the profit margin, but you know this stuff you’re just willfully ignoring it.

If you’re an ethical executive, you’re a unicorn.

Very well said. Let’s bring a few salient points:

All of us here work at jobs, possibly in very large corporates. Do we see anything illegal going on? I would reckon that >90% of us have gone through our corporate life without ever being a part of anything close to even illegal, at worst we forward something to legal to be extra sure. So if we think corporations are regularly behaving illegally, we all have simultaneously seemed to have lucked out to be in the one the one ethical and legally compliant organization.

If some part of your worldview is that the world is being filled with greedy, selfish and unethical people, constantly trying to screw over others but you are the exception most likely your worldview is completely off (Most people view themselves as the good guy/ hero of their world). In my experience it is very unlikely for anyone in C Suite to ever risk any actual fraud in their dealings (or anyone in the organization really), however lawyers are essentially parasites on society who feed on productive work to make a living while gaslighting rest of society into believing that they’re playing an important role in protecting it.

I don’t think the VW situation is at all unique, just the handling of it. I understood Deiselgate because I’ve worked for managers who just wanted checkboxes checked, and I’ve seen people who reward monetarily or with praise for solving problems but who don’t check for dead bodies before doing so. Too many coworkers who get promoted for making messes others had to clean up. What if the cleaners don’t exist in sufficient numbers? Or get laid off?

When you combine a mercenary mind with oversight from a person who doesn’t believe in “if it seems too good to be true, it probably is” that’s when the bad stuff starts to happen.

There’s also a machismo school of business that lionizes force of will. Telling employees you want something that seems impossible and expecting them to get it. Nevermind that by far the easiest way to cross an impossible finish line is to cheat your ass off.

How many products do we need class action suits on? How many exposes on child or captive labor? How many superfund sites? How many companies going bankrupt ten years later when the truth comes out, before we hold people accountable and call bullshit on the “aw shucks” response to tough questions?

Or maybe a Bachelor of Arts from a business school is not enough rigorous education to run a multinational company.

astounding the level of mind reading people have done

In this case, though, Fedex has just denied the allegations but not proffered any alternative explanation. Nature abhors a vacuum, and human nature abhors an information vacuum. Corporations habitually refuse to share information unless they are forced to do so legally, so they have only themselves to blame for the subsequent distrust by the public.

I think what you may be missing is the effect of compounding organizational incentives in big, old companies. I wonder - how much experience have you had in large legacy companies? (think "F100 company's subsidiary, based in Dubuque" type company)

I once helped fix up a manufacturing co that materially overstated net income by >10% for a decade. And it was just a mix of honest mistakes, miscommunications, some incompetence, and a shockingly small amount of fraud (though not 0).

I learned it's really easy for sr execs to run the company badly, one or two junior execs to push the limits, and a everyone else to just be a biiiit lazy - and bam, there's a big fraud.

That said 0 stock is up 5% w/w, so this can't be THAT big

Misrepresenting an odometer reading as true is a federal offense, and it seems clear that this happened in at least one of the cases in the article. I’ve never seen a car title that doesn’t have a field for noting an in accurate odometer. Federal rules also makes the seller sign an acknowledgement that the odometer reading is true, rolled over, or unknown.

Maybe there was no conspiracy involved, and the fleet mechanics were just swapping out defective gauge clusters (somehow always swapping in a lower mileage cluster).

So the best defense they have is that this was an accident of sloppy record keeping leading to a failure to make legally required disclosures… which is not a great defense.

>1) This is taken from a complaint in a class action lawsuit. Class action lawyers are very similar to patent trolls whereby they can spin almost any story they want. And journalists go for clicks, so they amplify the sensationalism. It doesn't mean this is one of those, but a class action complaint should not just blindly be trusted.

Do you think the rules that apply to patent litigators and class action litigators are different than the rules that apply to other litigators? I really don't understand what you seem to think is going on here, it's a bit naive imo (all the lawyers that I don't like are the bad ones and they lie!)

and I didn't even make it to your next part of your post, where you think that business executives are the honest ones! They aren't. They don't have their own personal license and livelihoods at risk most of the time, unlike attorneys.

>1) This is taken from a complaint in a class action lawsuit. Class action lawyers are very similar to patent trolls whereby they can spin almost any story they want.

The complaint has 4 cited individuals and follows up on an already ongoing lawsuit with a used vehicle dealer that filed a lawsuit in 2017 over being scammed as well.

> There is a strong theme of "of course execs lie cheat steal at every turn" and I also think this narrative should be questioned.

This narrative is "middle-middle management lies, cheats, and steals at every turn and sometimes on other people's turns too".

And while we might question that narrative about execs, we know that it is unfailingly true of middle management. It's not unexpected, that's what happens when perverse incentive is piled on top of perverse incentive. Someone was racing for a bonus. And discovery's going to show that there was some absurd uptick in how many OEM odometers for this model were ordered in the problem years, far in excess of anything that had happened previously.

>1) This is taken from a complaint in a class action lawsuit. Class action lawyers are very similar to patent trolls whereby they can spin almost any story they want.

The complaint class action references 4 affected independent individuals as victims.

But, this entire thing is in parallel with an already ongoing lawsuit by a used vehicle broker that filed a lawsuit in 2017 over being scammed as well.

https://cdllife.com/2021/fedex-battles-lawsuit-over-millions...

"To risk jailtime..."

Corporate America unfortunately does not worry about jail time. Instead fines are primarily paid from shareholder cash.

I wish jailtime was an impediment. It's not

Fantastic comment and insight, thank you.
>...if there was fraud, it was probably committed at a non-executive level by the person whose P&L was directly tied to these resales. Or, it was done independently by the much smaller leasing company where this was more existential to them.

I think most high-level executives are competent enough to create legal incentives and disincentives to their organization which typically are legal. The "lie, cheat, and steal" narrative is about functional outcomes and not so much about explicit follow through.

Executives are in positions they can craft goals and to some degree pass responsibility of details of those goals off to others. I can set unrealistic targets that are only attainable by cutting corners and be sure to make it clear I'll drop people who don't meet those targets or reward people who do. I can leave in-depth questioning about the approach (the potentially dirty details) to create a layer of plausible deniability.

It's as if I hire a driver to take me from point A to point B. That distance may be impossible to cover without violating an array of traffic laws. My goal as the passenger though is to traverse the space safely at some price. I don't really care about how it's done, I'll leave that to the driver. I can create pressure on a driver and/or apply selection bias to choosing a driver willing to take on my impossible request. At no point did I say: violate traffic laws, speed, etc. but I know that's what's going to happen to attain my goal. I never incriminate myself by making the goal generalized and as a passenger, I take on no legal risks for my driver violating traffic laws. Suddenly, using a crafted goal, careful selection, and money, I've created a situation for something illegal to happen. Should I be at fault? What if I even added to criteria of transporting me from A to B not to violate traffic laws but I give a wink wink, shove a little more money (incentive) at the problem, or turn the cheek when it occurs so I don't witness it. Am I still not at fault?

A caricature of this behavior in my opinion is Donald Trump who operates completely in the grey areas wherever possible, pushing or promoting questionable behavior but avoiding the provable cases where he's responsible. From my interaction with various executives over the years, this strategy isn't unique. It's certainly not everyone but impossible environments and requests are made on the daily. It happens from the highest levels and gets passed down and down.

and then selling them at auction with 100,000 ... However, their real mileage was sometimes as much as four times the odometer readout

These numbers matter more here. The Cummins/Allison engine/drive-train in these vehicles are otherwise good for 1 million miles before rebuild on average until they are used as delivery trucks. The constant stopping and starting used as delivery trucks cuts that number down to around 480k miles. So they are selling vehicles that will require engine and transmission rebuilds in less than 80k miles. That's very shady. The engine rebuilds are usually around $10k same as a refurbished engine and the transmission rebuild is around $3k. That does not count the cost to install them.

There's so much more than just the engine, though. I'm dealing with a bunch of aging issues on a car right now. A lot of this stuff won't even show for a few years down the road.

* Shocks and struts wear out

* Catalytic converters are a semi-wear item

* In winter states that use salt, rust absolutely destroys things. I've had the exhaust system rust through on all of my vehicles (simply happens with age).

* Seat cushions, steering wheel, and other high touch surfaces wear. Likely not an issue _now_, but means a few years down the road, these things will be broken.

* Engine accessories - belts, starters, alternators, pumps, etc. Everything is just a bit closer to it's failure point.

----

Most of these issues aren't particularly expensive on their own, but they add up. Further, your expected maintenance is wildly different.

I'm surprised they didn't get caught sooner. If it was _just_ an odometer rollback, it should have been easy to catch something being 'off' from a cursory inspection of the vehicle. The wear on things like driver seat bolsters is very different at 100K miles and 400K miles (and even at much lower mileage) and when stuff like that doesn't match the odometer readings, alarm bells should be going off.
I had a 1/2 ton Dodge with a Cummins. The one thing you know or learn fast with a diesel is you change the fuel filter often. Diesel engines are nearly indestructible if the maintenance is done right at the very least the fuel filter.
I did have a weird thought, in a organisation as big as FedEx, would they have a pool of spare engines to minimise downtime? You could get unlucky and get a can with an engine that's been through a few chassis and end up with an ECU that knows the engine has done 400k miles whilst the chassis has only done 180k?

Although that's probably a mad theory, if there is hijinks it probably is the good old fashioned kind, probably from this 3rd party middleman rather than FedEx themselves though.

When did we move to a "do whatever you think you can get away with" model of society?

Maybe I'm naive but I think there used to be at least a modicum of self-restraint on this kind of thing. Sure, people always tried to make as much money as possible, but there used to be some limit somewhere - not because you'll get caught but because c'mon, we just don't do that! That seems to have now been totally lost.

> When he sold the truck, his buyer hooked it up to a computer that told them the real mileage was around 400,000 miles.

I’m not knowledgeable about odometers at all, but if it’s as easy as “hooking up to a computer” to get the real mileage, why don’t people do that when they buy the trucks?

I have doubts that we're getting an accurate story here, I know it's trendy to hate big companies but this seems like a really stupid thing to do and something you're likely to get caught doing if you're doing it on every truck.

Anyone buying used delivery trucks knows they get driven all day every day until it's uneconomical for the owner to continue operating them. Hundreds of thousands of miles. It would be very unusual to see one for sale with under 200k miles, that's "just getting broken in" for trucks like this.

I'm even surprised that these trucks have mechanical odometers. I havent's seen one in a passenger car in many years, they are all digital, rarely fail and (I assume) would be harder to tamper with.

A close reading of the article leaves room to doubt whether FedEx was complicit in the alleged scheme. I’m not surprised to see that FedEx denies the allegations. Given that there is another defendant in the lawsuit I suspect there is more to this story than what’s been presented here.
All I can think is "why would you replace every odometer if you weren't committing fraud?". Like that costs money and time to do. Were they all broken and needed replacing?

And if you aren't committing fraud and there's a reasonable reason to do this, why not do it just before sale? Why drive another 100k on them afterwards?

It's just so dumb and obvious.

For the how:

The lawsuit accuses FedEx of replacing the odometers in many of its vans with new ones that read zero miles, using the vans for a bit longer after that

Being born into a 5 digit odometer world and growing up around people who learned every way possible to suss out mileage - this seems nuts to me. How could they think that zero people would suspect and investigate an odometer swap?

Past that, how could so few company mechanics notice a discrepancy between mileage and wear - that no whistleblowers came forward?

Complete shot in the dark, but I bet culpability lies with FedEx's thousands of subcontractors. Their van lease agreements with FedEx obviously benefit them if they return them with fewer miles. Given that a great deal of contractors tiny family businesses, it doesn't surprise me that enough of them tried to eek out more profit for people to start to notice.
Semi-related anecdote regarding this. This won’t happen with UPS delivery vans, as they have them custom made and scrap them at end of life.

I assume for trademark purposes, among other things.

There was a brief discussion of this about five days ago, though well below the dupelicate-submission threshold, with only 5 comments:

<https://news.ycombinator.com/item?id=36460395>

From Jalopnik: "FedEx Odometer Fraud" <https://jalopnik.com/fedex-named-in-what-could-be-one-of-the...>

I find this hard to believe. The claims of both lawsuits are basically the same. The FedEx routes are all independently owned. The route owners are responsible for fixing their vehicles. Parts get replaced constantly. Its a never ending mechanics job to serve these fleet vehicles.
As a public company, FedEx undergoes routine audits. Do accounting firms audit vehicle mileage? I'd assume that vehicle depreciation is is an important part of the balance sheet calculations at Fedex, and that mileage might be audited as part of the depreciation functions.
> Tom Layton of Henderson, Nevada first noticed FedEx's odometer rollbacks in 2017. Layton, who's been buying and selling trucks and vans for 36 years, bought a FedEx Freightliner truck with around 180,000 indicated miles. When he sold the truck, his buyer hooked it up to a computer that told them the real mileage was around 400,000 miles.

And yet another reason to ensure "Right to Repair" Laws are passed and enforced.

Right now, one state, I forgot which, was informed by the auto industry they will ignore the law. I do not know if enforcement has started yet.

Similar, but much smaller scandal in UK involving BMW and Police.

1 BMW N57 Diesel engines like to catch fire if idled for a long time and then flogged (Oil/EGR coolant leak) https://jalopnik.com/bmws-are-bursting-into-flames-so-they-d... https://www.dailymail.co.uk/news/article-11637379/Widow-PC-k...

2 Police are exempt from MOD so their cars dont have documented service/odometer history.

3 Tons of dealers bought decommissioned Police BMWs and rolled odometers.

The Clocked Up Holy Engine Scandal of the UK Police BMW Fleet by Geoff Buys Cars https://www.youtube.com/watch?v=YEryJeBcg-8

No more BMW Police Cars in the UK... thanks to N57 Engine Fires by Geoff Buys Cars https://www.youtube.com/watch?v=_gJFDdnMXKg

I remember hearing a story of a car rental doing this on a systematic scale. When they were caught, they acknowledged a "mistake" and offered to reimburse difference in price.

However, they were caught fiddling the mileage again on the 'reimbursed' cars (not upping it enough). They were caught for the second time because the catalytic converter had a chip that counted every 250 miles or something along those lines.

Doesn't surprise me, they didn't give me a cost of living increase for over a decade and new hires were making almost as much as I was when I quit after 15 and a half years (office job), along with about half the office quitting within a year.
Is anyone facing jail time for this historic fraud?
If its true I'm sure there will be a number of lawsuits. The existing court system can settle this kind of thing pretty well.
The simple solution is never...ever... buy a used fleet vehicle.
Maybe it has something to do with talking a package from Southern California, to Florida, to Texas, delay shipping twice, and then back to Northern California. If I need the item and I see FedEx as the shipping agent, I go look elsewhere.
> they're resold and repurposed for various purposes.

"Allow myself to introduce... myself"

Some comment said these were resold as completely refurbed food trucks so the Fedex connection is dubious at best.
"It isn't illegal to replace odometers and it isn't even illegal to sell vehicles with odometers that have inaccurate mileage readouts. However, to do so, a disclaimer needs to be made by the seller, indicating to the buyer that its mileage readout is inaccurate and that the odometer was replaced."

How is it even legal? "You can lie but you have to admit to it".