Vroom, a Texas-based company that until January sold used cars online, has agreed to settle a Federal Trade Commission (FTC) lawsuit by agreeing to refund $1 million to customers harmed by its allegedly illegal conduct. Vroom's marketing promised a better way to buy and sell used cars, online, with no need to do go a dealership. Vroom also agreed to change its business practices, should it sell cars online in the future.

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In its complaint, the FTC alleged the Vroom broke the law when it:

  • Misrepresented the thoroughness of presale inspections.
  • Until late in its purchase process, did not provide customers with the mandated Buyers Guide, which discloses whether the car comes with a warranty or is being sold “as is.”
  • Failed to post copies of its warranties on its website in close proximity to warranted vehicles, as required by law.
  • Would not allow customers to cancel their orders and get refunds when cars weren’t delivered on time. For online sales, dealers are required to provide the option to cancel and get a prompt refund if vehicle delivery dates are delayed.

“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 other brick-and-mortar businesses that comply with the law.”

In January, Vroom announced that it was “shifting gears” and shutting down its e-commerce used car business to “preserve liquidity” and “maximize stakeholder value” through its remaining businesses.

Buying a used vehicle is always risky, especially when you can’t inspect it prior to purchase. Vroom tried to alleviate that concern by claiming its cars underwent “multiple inspections” prior to delivery. In a filing with the Securities and Exchange Commission (SEC) Vroom said it sold only “high-quality used vehicles” that had passed “detailed inspections” and met the company’s proprietary “reconditioning standards.”

Unhappy customers told a different story, complaining to the FTC and the Better Business Bureau (BBB) about loud grinding noises, bald tires, worn brakes, rusted rotors, broken tail lights, and even vehicles that came with illuminated “check engine” lights.

In the last three years, the BBB closed 4,792 complaints about Vroom. The BBB report on the company noted a “pattern of complaints” starting in 2020:

Complaints received from consumers alleged the vehicles they purchased from photos was [sic] not the vehicle they received. When the vehicle was received it had either body damage, interior was dirty, discolored, or damaged or all of the above. Some consumers stated their cars were delivered at night, so damages were not noticed at delivery, while other complaints stated the cars were left in a parking lot or driveway at night with the keys left in them. Consumers also stated they were having customer service and communication issues when trying to reach out to the company to address their concerns.”

Vroom advertised that buyers would receive their cars in 14 days or less, but according to the FTC’s complaint, some customers had to wait three months or longer before their cars arrived.

Under the proposed settlement (which still must be approved by a judge), Vroom did not admit any guilt, but it agreed to pay the FTC $1 million, which will be distributed as refunds to customers who were harmed by the company’s practices alleged in the government’s lawsuit.

Protect Yourself

You can’t tell if a vehicle is safe and mechanically sound by looking at it or taking it for a test drive. A little cosmetic “detailing” can distract from hidden mechanical problems.

So, check the car’s history by getting a report from a company such as CARFAX or AutoCheck to see if the vehicle has been in a major accident or stolen. These reports also provide odometer readings, and information about service, repairs, and recalls.

But these vehicle history checks can’t catch everything. That’s why Checkbook advises having a qualified independent mechanic inspect any used vehicle before you buy it. The $150 you spend on that pre-purchase inspection could prevent expensive repairs down the road. A private seller may not let you do this, which makes these transactions especially risky.

All too often, buyers discover a problem after the sale. Remember: Once you sign the contract, that vehicle is yours. Even if the car is covered by a warranty or service contract, it may be a hassle to get it repaired. If you’re buying a used EV, Consumer Reports recommends having the battery health checked.

This same advice, have a pre-sale mechanical inspection, applies to vehicles that are advertised as “inspected” or “certified.” A Checkbook investigation discovered that certified labels don’t guarantee vehicles won’t have serious hidden mechanical or structural problems. We found flaws that should have been noticed during promised inspections, and certified cars that were totaled wrecks that were rebuilt and resold—even an SUV previously owned by the government and used in crash tests.

More from Checkbook:

Used-Car Certifications Often Not Meaningful

Avoid Getting Stuck with a Flood-Damaged Used Car

Listen to our Consumerpedia podcast, episode 63: The Car Show 2024


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Contributing editor Herb Weisbaum (“The ConsumerMan”) is an Emmy award-winning broadcaster and one of America's top consumer experts. He has been protecting consumers for more than 40 years, having covered the consumer beat for CBS News, The Today Show, and NBCNews.com. You can also find him on Facebook, Twitter, and at ConsumerMan.com.