LAW-News-vroom -0724 | LAW® 553®

Recent Federal Trade Commission (FTC) action has provided yet another example of how important it is to take the quality of your documents and business practices seriously.

Texas-based online used car dealer Vroom has agreed to pay $1 million to refund customers for its misconduct in a proposed settlement with the FTC. Among other things, the settlement would prohibit the dealer from making misleading claims to consumers about vehicle inspections or shipping, require them to document all promises it makes about shipping times, and to follow the requirements of the Used Car Rule, Pre-Sale Availability Rule, and Mail, Internet, and Telephone Order Rule (MITOR).

“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 an agency press release. “Online car dealers and other Internet sellers must provide required disclosures just like any brick-and-mortar businesses that comply with the law.”

Vroom sold more than 170,000 used vehicles through its website since 2019. According to the FTC, the dealer’s advertising said its vehicles underwent multiple inspections to ensure they were in good condition, but numerous customer complaints told a different story. The FTC’s complaint alleges that customers complained about the condition of vehicles, including loud grinding noises, bald tires, and worn brakes.

In addition to these claims, the FTC’s complaint alleges Vroom failed to follow the following key rules:

Used Car Rule

This rule requires that a used car dealer properly complete and display a Buyers Guide on each used car it offers for sale. The FTC claims Vroom didn’t provide a Buyers Guide until late in the purchase process and that they were often missing required information.

Pre-Sale Availability Rule

The FTC believes that Vroom violated this rule by not posting the terms of its warranty on its website close to the warranted vehicle. The agency also stated the dealer didn’t inform customers about how they could obtain the warranty’s terms before receipt of the sale documents.

Mail, Internet, and Telephone Order Rule (MITOR)

The FTC highlighted that Vroom told customers that vehicles would be delivered in 14 days or less in its advertising and website. Even with this clear statement, Vroom didn’t give customers the opportunity to either consent to a longer delivery timeline or cancel their purchase and receive a prompt refund – which MITOR requires.

Dealers can use FTC enforcement actions as an educational tool to help better understand the FTC’s focus and concerns about industry practices. FTC complaints are drafted solely from the agency’s perspective without explanations or defenses from the dealer.

This proposed settlement will now be reviewed by the U.S. District Court for the Southern District of Texas before being finalized.

Click here to see the full FTC complaint.

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