Vroom, an online used car dealer, has agreed to pay $1 million to settle allegations made by the Federal Trade Commission (FTC) that it misled consumers and violated regulations. The FTC claimed that Vroom deceived customers by advertising that its vehicles had undergone rigorous inspections before being listed for sale. However, consumer complaints later revealed issues with the condition of the vehicles, including worn brakes. Additionally, Vroom failed to meet its promised delivery timeline of 14 days or less and did not provide consumers with a “buyers guide” containing important information about the used car’s warranty. The company also violated the Pre-Sale Availability Rule by not posting warranty terms on its website near the warranted used vehicles.
The settlement requires Vroom to refund consumers who were harmed by the company’s practices. In addition to the financial penalty, Vroom is banned from making misleading claims about inspections or shipping and must document all claims and promises it makes regarding shipping times. The company must also comply with the Mail, Internet, and Telephone Order Rule, the Used Car Rule, and the Pre-Sale Availability Rule.
Vroom has sold over 170,000 vehicles to consumers through its official website since 2019. The website listed 184 points of inspection that were checked on every car sold, according to the FTC. However, despite these claims, consumers raised multiple complaints about the vehicles’ condition and other issues. This raises concerns about the accuracy of Vroom’s inspection process and the quality of its vehicles.
The company’s failure to meet its promised delivery timeline is another significant issue. Customers who expected their purchased vehicles to be delivered within 14 days or less were disappointed when Vroom did not regularly meet this timeline. The FTC highlights that Vroom did not provide consumers with the option to consent to a longer delivery timeline or cancel their purchase for a prompt refund, as required by regulations.
Furthermore, Vroom’s failure to provide a “buyers guide” until late in the purchase process is another violation. This guide contains essential information about the used car’s warranty, among other things. The late provision of this guide and the omission of required information raise concerns about transparency and consumer protection.
Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, emphasizes the importance of online car dealers and other internet sellers complying with the law and providing required disclosures. He states that Vroom promised fast deliveries and thoroughly inspected cars but failed to meet compliance standards.
Despite discontinuing its e-commerce operations, Vroom still operates an automotive finance company, United Auto Credit Corporation (UACC), and CarStory, an AI-powered platform that matches consumers with vehicles. It remains to be seen how these remaining businesses will be affected by the settlement.
In conclusion, Vroom’s settlement with the FTC highlights the importance of transparency and compliance in the online used car industry. Consumers should be cautious when purchasing vehicles online and ensure that they thoroughly research the company’s reputation and policies before making a purchase. The FTC’s actions serve as a reminder to all online sellers that they must adhere to regulations and provide accurate information to protect consumers.
