FedEx, Holman Auto Group Behind Largest Odometer Fraud Scam in U.S. History, Class Action Alleges

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A proposed class action alleges FedEx and Holman Automotive Group have secretly replaced the odometers in thousands of used commercial diesel vehicles before later selling the trucks at inflated prices—without disclosing that their mileages are inaccurate. 

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The 38-page lawsuit alleges FedEx, Holman Automotive Group, Holman Fleet Leasing and Automotive Rentals, Inc. have perpetrated “the largest odometer fraud scheme in United States automotive history,” in “clear violation” of federal and state law. The scam includes, among other diesel fleet vehicles, “the instantly recognizable step vans currently crisscrossing just about every neighborhood in the United States,” many of which are versatile enough to be used later by other couriers or transformed into food trucks, the suit states. 

According to the lawsuit, although FedEx keeps meticulous records of its vehicles’ use and maintenance—and thus knows “the precise number of miles traveled by each of its vehicles at any given time”—the company, in partnership with fleet management company Holman, has replaced thousands of its vehicles’ odometers without setting the new odometers to the correct mileage or otherwise disclosing that the odometers did not reflect the actual mileage. FedEx then continued to use the vehicles until they were sold by Holman for “much more than they were worth,” the case says. 

Most of the time, the complaint says, the parties duped by the defendants are unsuspecting small business owners whose livelihoods depend on and who ultimately overpay significantly for diesel delivery vehicles that have been driven for many more miles than advertised and “are past their useful life expectancy.” 

“The new odometers display zero miles, though Defendants know that the vehicles have, in many cases, been previously driven hundreds of thousands of miles,” the filing summarizes. 

Per the case, one of the services offered by Holman Automotive Group, one of the largest fleet management companies in the world, is the “remarketing” of commercial fleet vehicles such as those used by FedEx. According to the suit, FedEx hired Holman several years ago to manage its fleet of more than 210,000 vehicles, and as FedEx’s fleet management vendor, Holman had full access to the company’s monitoring software and vehicle data. 

Often, major couriers such as FedEx and UPS retire and destroy older vehicles, namely due to assorted liability and trademarking concerns, the filing shares. Though Holman originally helped FedEx identify and scrap diesel fleet vehicles that reached the end of their useful lives—generally around 350,000 miles—the defendants around 2011 “determined that they could create an additional revenue stream by remarketing, rather than destroying, FedEx’s fleet vehicles,” the lawsuit says. 

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The case alleges FedEx and Holman entered into a “mutual agreement and understanding” with the intent to “jointly commit odometer fraud,” and in fact “did go on to commit thousands of separate instances of odometer fraud.” 

“As part of this agreement, FedEx would transfer the FedEx/Holman Vehicles to Holman, then Holman would sell the FedEx/Holman Vehicles at auction, usually to be purchased by a local retailer and eventually sold to the end consumer.”

Each vehicle transaction involving a fraudulent odometer followed a similar pattern, the suit claims. In particular, in the “vast majority of cases,” Holman, after taking title to a FedEx vehicle, would sell the vehicle through a large, regional auto auction and then sign and transfer the title for the vehicle to the buyer, completing the odometer disclosure section of the paperwork, the lawsuit says. 

“At all times herein, neither FedEx nor Holman acknowledged in the odometer disclosure that the odometer display of the FedEx/Holman Vehicle was ‘Not Actual Miles (Not Actual),’ or that the odometers were replaced and the mileage was ‘True Mileage Unknown (TMU),’” the case charges, claiming the profits from sales of vehicles with tampered-with odometers would be split by FedEx and Holman.

The lawsuit alleges FedEx and Holman have replaced thousands of odometers in the fleet vehicles at issue without accounting for their actual miles. Crucially, though an odometer may wear out or malfunction and require replacement, there was “no valid reason” for the defendants to swap out the odometers of FedEx vehicles on such a large scale “other than to perpetuate their agreement to commit odometer fraud,” the case says. 

“Moreover, at the time the odometers were replaced, FedEx and Holman knew exactly how many miles had been traveled by the FedEx/Holman Vehicles and could have easily set the new odometers to show the actual mileage of those vehicles. Instead, the new odometers displayed zero miles. There was no valid reason for this failure or refusal to properly set the replaced odometers on FedEx/Holman Vehicles at true mileage, especially knowing that the vehicles would be resold.” 

According to the complaint, the National Highway Traffic Safety Administration (NHTSA) estimates that upward of 450,000 vehicles are sold annually with false odometer readings, a crime that costs American consumers more than $1 billion per year. The federal Motor Vehicle Information and Cost Savings Act, passed by Congress in 1972, made it illegal to tamper with the odometer of a vehicle advertised for sale, or adjust such a vehicle’s mileage in any way, the suit relays. 

Under the law, the case states, a person transferring ownership of a vehicle must disclose to the transferee the cumulative mileage registered on the vehicle’s odometer or, if the actual mileage is unknown, that the transferer knows the odometer reading is different from the actual number of miles the vehicle has traveled. 

The lawsuit looks to cover all individuals and entities in the United States, including their beneficiaries, estates and successors in interest, who bought one or more FedEx/Holman vehicles that were managed by Holman under its agreements with FedEx, and for which the odometer was replaced or altered and did not reflect the actual miles traveled by the vehicle, and for which there was no legally required notice under the Odometer Act and/or New Jersey Consumer Fraud Act. 

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