FTC Says Vroom Agrees to $1 Million Settlement

Vroom, the online used car dealer that discontinued its eCommerce operations in January, has reportedly agreed to a proposed settlement that would include it paying $1 million that would be refunded to consumers.

The Federal Trade Commission (FTC) said in a Tuesday (July 2) press release that Vroom agreed to the proposed settlement after the regulator took action against the company, alleging that it deceived customers, failed to deliver on time and failed to provide required disclosures.

“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 the 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 wound down its used vehicle dealership business but owns and operates United Auto Credit Corp. (UACC) and CarStory.

Reached by PYMNTS, a Vroom spokesperson said in an emailed statement that the company is pleased to have reached a final resolution of this matter as part of the wind-down.

“The FTC’s allegations relate to pandemic-era challenges that arose in the Company’s discontinued ecommerce operations,” the statement said. “Under the settlement, which we previously disclosed in our SEC filings, the Company admitted no wrongdoing and agreed to pay a total of $1 million in customer redress and abide permanently by an injunction.”

In its complaint against Vroom, the FTC alleges that the company violated the Used Car Rule, the Pre-Sale Availability Rule, and the Mail, Internet and Telephone Order Rule (MITOR), according to the press release.

The agency alleges in the release that Vroom sold cars that were later the subject of complaints by consumers to the FTC, that it didn’t give consumers the opportunity to consent to a longer delivery timeline or cancel their purchase when it failed to meet its stated delivery timeline, that it failed to provide a “Buyers Guide” with information about a vehicle’s warranty until late in the purchase process, and that it did not post the terms of the warranty on its website in close proximity to the relevant vehicle.

Vroom said in January that it was winding down its eCommerce platform for buying and selling used vehicles and would instead focus on its other ventures: UACC, which is an automotive finance company, and CarStory, which is a provider of artificial intelligence (AI)-powered analytics and digital services for automotive retail.

In April, Vroom said it completed the wind-down of the eCommerce and used vehicle dealership businesses, and that UACC and CarStory are not affected by the move and continue to serve their third-party customers.