Used Car Dealer Vroom Reaches $1 Million Settlement With FTC

The Federal Trade Commission (FTC) building in Washington. (Paul J. Richards/AFP via Getty Images)

Used car company Vroom will pay $1 million to settle allegations made by the Federal Trade Commission (FTC) that it misled consumers into believing it had inspected all vehicles before listing them, and failed to ship automobiles on time.

Announcing the settlement on July 2, the federal agency said in a statement that the settlement money will be used to refund consumers harmed by the Texas-based company’s “unlawful practices.”

As part of the agreement, Vroom is also banned from making misleading claims to consumers about inspections or shipping, and the company must ensure it documents all claims and promises it makes about shipping times to consumers, the FTC said.

Additionally, the online used car dealer must follow the requirements of the Mail, Internet, and Telephone Order Rule (MITOR), the Used Car Rule, and the Pre-Sale Availability Rule.

The settlement stems from a complaint filed by the FTC against Vroom in the U.S. District Court for the Southern District of Texas in which the agency alleged the car dealer deceived customers, failed to deliver on time, and failed to provide required disclosures.

Specifically, the FTC claimed the company violated multiple regulations when it advertised to consumers—who were concerned about buying a used car without being able to inspect it before purchasing—that its vehicles had undergone rigorous inspections before being listed for sale.

Sold Over 170,000 Vehicles via Website

Since 2019, Vroom has sold more than 170,000 vehicles to consumers through its official website, which listed 184 points of inspection that were checked on every car it sold, according to the FTC.

Despite Vroom’s claims, the vehicles were later the subject of multiple consumer complaints that raised issues regarding everything from their condition to worn brakes.

In its lawsuit, the FTC also alleged that Vroom had told consumers the vehicles they purchased would be delivered within 14 days or less but failed to regularly meet that delivery timeline.

Vroom failed to allow consumers to either consent to a longer delivery timeline or cancel their purchase and receive a prompt refund, as required by MITOR, the agency said.

Elsewhere, the FTC alleged Vroom failed to provide consumers with a “buyers guide,” which contains information about whether the used car comes with a dealer’s warranty, among other things, until late in the purchase process and that the guides often did not include required information.

Finally, the agency’s complaint alleged that Vroom violated the Pre-Sale Availability Rule by failing to post the terms of its warranty on its website in close proximity to the warranted used vehicle.

“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 in a statement. “Online car dealers and other Internet sellers must provide required disclosures just like any brick-and-mortar businesses that comply with the law.”

In January, Vroom announced it was discontinuing its e-commerce operations “in order to preserve liquidity and enable the Company to maximize stakeholder value through its remaining businesses.”

However, the company still owns and operates an automotive finance company, United Auto Credit Corporation (UACC), and CarStory, which uses artificial intelligence (AI) to match consumers with vehicles.

A Vroom spokesperson told The Epoch Times in an emailed statement that the FTC’s allegations “relate to pandemic-era challenges that arose in the Company’s discontinued e-commerce operations.”

Vroom admits no wrongdoing as part of the settlement, the spokesperson noted.

“Prior to February 2024, Vroom operated an end-to-end e-commerce platform to buy and sell used vehicles. Pursuant to its previously announced Value Maximization Plan, Vroom discontinued its e-commerce operations and wound down its used vehicle dealership business,” the spokesperson said. “As part of the wind-down of those operations, the Company is pleased to have reached a final resolution of this matter.”