Vroom, the former online used car dealer, has agreed to pay $1 million to settle allegations of the Federal Trade Commission (FTC) that it didn’t abide by consumer protection laws, including providing prompt refunds.
The Texas-based company sold more than 170,000 used cars through its website before it shut down that part of its business in January. Usually, customers bought the cars without seeing or driving them first. The company claimed the cars underwent detailed inspections, in which 184 points were checked, to make sure they were in good condition.
Under the Used Car Rule, Vroom was supposed to prepare “Buyers Guides” for each car, including whether a warranty was provided and what was covered, but Vroom failed to do so, the FTC alleged.
But complaints by consumers about the poor condition of cars, and the company failing to deliver a purchased vehicle within the 14 days promised by Vroom, mounted, the FTC said in its complaint, filed Tuesday in U.S. District Court for the Southern District of Texas. Some customers waited three months for their cars to be delivered.
The company was obligated under the Mail, Internet and Telephone Order Rule (MITOR) to offer customers prompt refunds or to agree to a later delivery time, the FTC said.
Vroom also violated the the Pre-Sale Availability Rule, the FTC alleged.
The $1 million agreed to by Vroom in the settlement will be provided to refund consumers who the FTC alleges were harmed by the company’s aggressive tactics and failures. Vroom continues to operate United Auto Credit Corporation, an automotive finance company, and an AI-driven analytics service for retail car dealers.
The settlement prohibits Vroom from making any further misleading claims about inspections or shipping, and requires it to follow all applicable laws. The FTC voted 5-0 to file the complaint and to stipulate the final order.
“Vroom promised the fast deliveries of thoroughly inspected cars, but sped right past compliance,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a press release Tuesday. “Online car dealers and other Internet sellers must provide required disclosures just like any brick-and-mortar businesses that comply with the law.”
Vroom did not immediately respond to a request for comment.
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