FedEx is facing a 15-count indictment including a conspiracy to distribute controlled substances charge, stemming from allegations the shipping company did not heed warnings from US drug officials that illegal online pharmacies were using the company’s services to ship prescription drugs. FedEx SVP Patrick Fitzgerald says the company will plead not guilty.
According to the indictment, FedEx had been warned as far back as 2004 about these illegal online pharmacies. “In one instance,” reports The New York Times, “FedEx knew the Drug Enforcement Administration had shut down one pharmacy, but continued to ship packages from its affiliates.” The company is accused of coming up with other ways to get these packages to recipients, including deliveries to parking lots and vacant homes.
Fitzgerald posted an extended response to the indictment on the FedEx website, using a hot keyword in its defense: “privacy.”
“FedEx has a 42-year history of close cooperation with law enforcement agencies. We’re proud to say that we have partnered with the FBI, the Department of Homeland Security, DEA, and other federal, state and local law enforcement teams around the world to help stop illegal drug activity and bring criminals to justice,” reads the statement in part.
After speaking to its efforts to help the government in its efforts to thwart illegal drug shipping, the statement touches on a topic of interest to many of its customers.
“We want to be clear what’s at stake here: the government is suggesting that FedEx assume criminal responsibility for the legality of the contents of the millions of packages that we pick up and deliver every day. We are a transportation company – we are not law enforcement. We have no interest in violating the privacy of our customers. We continue to stand ready and willing to support and assist law enforcement. We cannot, however, do the job of law enforcement ourselves.”
If the government is making its case based on past warnings and the expectation that FedEx would be able to shift its procedures to avoid illegal activity, FedEx could face a future where they’re going to have to make changes to their customer service policies. The indictment alleges that FedEx made $820 million from these activities. The fine, according to the NYT, could be twice that. Experts speaking to NPR concur with some of the points FedEx makes in its statement; the company can only do so much.
FedEx isn’t the only shipping company to face these sort of allegations. UPS paid $40 million to settle a similar case.
FedEx reported $11.8 billion in revenue for the quarter ending in May. So even a fine of more than $1 billion wouldn’t do too much damage. And certainly, customers don’t want to have their privacy violated by a shipping company. They want to know that the contents of their packages, once sealed, are known to only them and the recipient.
So there might be a cause here for FedEx’s PR team and its lobbyists to tackle. To balance interests on both sides, it sounds like there’s a need for some adjustments.