The Federal Trade Commission has taken action against online used car dealer Vroom for misrepresenting that it thoroughly examined all vehicles before listing them for sale and failing to obtain consumers’ consent to shipment delays or provide prompt refunds when cars weren’t delivered in the time Vroom promised.
Texas-based Vroom has agreed to a proposed settlement that would require the company to pay $1 million to refund consumers harmed by the company’s conduct and prohibit the company from further misleading consumers and failing to provide required disclosures.
“Vroom promised the fast deliveries of thoroughly inspected cars, but sped right past compliance,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Online car dealers and other Internet sellers must provide required disclosures just like any brick-and-mortar businesses that comply with the law.”
In its complaint against Vroom, the FTC alleges that the company failed to follow the Used Car Rule, the Pre-Sale Availability Rule, and the Mail, Internet, and Telephone Order Rule (MITOR).
Since 2019, Vroom has sold more than 170,000 vehicles to consumers through its website. In its advertising, Vroom said that its cars underwent “multiple inspections” to ensure they were in good condition in an effort to alleviate consumers’ concerns about buying a used car without being able to inspect it before purchasing. Vroom’s website even listed 184 points of inspection that were checked on every car they sold.
Consumer complaints about the company told a different story, according to the FTC’s complaint. Numerous consumers complained about the condition of the cars they received from Vroom, with everything from loud grinding noises, bald tires, and worn brakes being reported.
The complaint also notes that Vroom told consumers that cars purchased from the company would be delivered in 14 days or less in its advertising and on its website. Despite making this clear statement, when it couldn’t meet that delivery timeline, Vroom regularly failed to give consumers the chance either to consent to a longer delivery timeline or cancel their purchase and receive a prompt refund as required by MITOR. The complaint cites instances where consumers have had to wait as much as three months or longer before their car arrived.
As a used car dealer, Vroom also is required to follow the FTC’s Used Car Rule which includes a requirement that dealers properly complete and display a “Buyers Guide” on each used car it offers for sale. The Buyers Guide gives consumers important information about whether the used car comes with a warranty or is being sold “as is.”
If a car is sold with a dealer’s warranty, the Used Car Rule requires the Buyers Guide list its basic terms and conditions including duration of coverage; percentage of total repair costs paid by dealer; exact systems covered by warranty. Complaint alleges late provision/missing info in Guides.
Finally alleges violation Pre-Sale Availability Rule not posting warranty terms close proximity warranted vehicle/not informing customers obtaining terms prior receipt sale documents.
Under proposed settlement terms: $1 million payment FTC refunds harmed unlawful practices.
Settlement prohibits misleading claims inspections/shipping; requires documentation shipping promises/claims; adherence MITOR/Used Car Rule/Pre-Sale Availability Rule.
Commission vote authorizing staff file complaint/stipulated final order was 5-0.
FTC filed complaint/final order U.S District Court Southern District Texas.
NOTE: Commission files complaint "reason believe" named defendants violating/about violate law appears proceeding public interest.
Stipulated final orders force law approved/signed District Court judge.
Staff attorneys matter Luis Gallegos/Sarah Zuckerman/Serena Mosley-Day FTC Southwest Region.
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