Additional Information for Vroom

The business has entered into Closed Agreed Orders (CAO) with the Texas Department of Motor Vehicles. The CAO settles allegations that the business failed to time transfer car titles and other issues.  For more details go to https://txdmv.secure.force.com/dealers/motorvehicledealerliststaging.

July 2, 2024

FTC Takes Action Against Online Used Car Dealer Vroom for Deceiving Customers, Failing to Deliver on Time and Provide Required Disclosures

Proposed court order would require Vroom to turn over $1 million for consumer redress

The Federal Trade Commission has taken action against online used car dealer Vroom for misrepresenting that it thoroughly examined all vehicles before listing them for sale and failing to obtain consumers’ consent to shipment delays or provide prompt refunds when cars weren’t delivered in the time Vroom promised.

Texas-based Vroom has agreed to a proposed settlement that would require the company to pay $1 million to refund consumers harmed by the company’s conduct and prohibit the company from further misleading consumers and failing to provide required disclosures.

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

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

Since 2019, Vroom has sold more than 170,000 vehicles to consumers through its website. In its advertising, Vroom said that its cars underwent “multiple inspections” to ensure they were in good condition in an effort to alleviate consumers’ concerns about buying a used car without being able to inspect it before purchasing. Vroom’s website even listed 184 points of inspection that were checked on every car they sold.

Consumer complaints about the company told a different story, according to the FTC’s complaint. Numerous consumers complained about the condition of the cars they received from Vroom, with everything from loud grinding noises, bald tires, and worn brakes being reported.

The complaint also notes that Vroom told consumers that cars purchased from the company would be delivered in 14 days or less in its advertising and on its website. Despite making this clear statement, when it couldn’t meet that delivery timeline, Vroom regularly failed to give consumers the chance to either consent to a longer delivery timeline or cancel their purchase and receive a prompt refund, as required by MITOR. The complaint cites instances where consumers have had to wait as much as three months or longer before their car arrived.

As a used car dealer, Vroom also is required to follow the FTC’s Used Car Rule, which includes  a requirement that the dealer properly complete and display a “Buyers Guide” on each used car it offers for sale. The Buyers Guide gives consumers important information about whether the used car comes with a warranty or it is being sold “as is.”

If the car is sold with a dealer’s warranty, the Used Car Rule requires the Buyers Guide to list its basic terms and conditions, including the duration of coverage, the percentage of total repair costs to be paid by the dealer, and the exact systems covered by the warranty. The complaint alleges that Vroom failed to provide the Buyers Guide until late in the purchase process, and that the Guides were often missing required information.

Finally, the complaint alleges that Vroom violated the Pre-Sale Availability Rule because it did not post the terms of its warranty on its website in close proximity to the warranted used vehicle. Nor did Vroom inform customers how they could obtain the warranty’s terms prior to the receipt of the sale documents.

Under the terms of the proposed settlement, Vroom will be required to pay $1 million to the FTC to be used to provide refunds to consumers who were harmed by the company’s unlawful practices.

The settlement also prohibits the company from making misleading claims to consumers about inspections or shipping, and requires Vroom to document all claims about promises it makes about shipping times to consumers, as well as requiring Vroom to follow the requirements of MITOR, the Used Car Rule, and Pre-Sale Availability Rule.

The Commission vote authorizing the staff to file the complaint and stipulated final order was 5-0. The FTC filed the complaint and final order in the U.S. District Court for the Southern District of Texas.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. Stipulated final orders have the force of law when approved and signed by the District Court judge.

The staff attorneys on this matter were Luis Gallegos, Sarah Zuckerman, and Serena Mosley-Day of the FTC’s Southwest Region.

On December 13, 2023, Vroom and dba Texas Direct Auto entered into an Agreed Final Judgment and Permanent Injunction with the Texas Attorney General’s office. This agreement settles prior allegations that the business misrepresented and failed to disclose significant delays in transferring clear title and obtaining vehicle registrations.  The State also alleged that the business had misrepresented and failed to disclose vehicle history and condition and terms of financing and approval, all violations of the Texas Deceptive Trade Practices Consumer Protection Act- Consumer Protection Act, Tex. Bus. & Com. Code §§ 17.41-17.63 (“DTPA”).

Under terms of the Agreed Final Judgment and Permanent Injunction, Vroom, whether acting directly or through any trust, corporation, division, or other devise, shall be restrained from engaging in the following acts or practices listed below with Retail Consumers:

• Advertising as available for sale or selling a vehicle until Vroom is in Possession of Title for the vehicle. This provision does not apply to vehicles advertised by Vroom on behalf of Third-Party Sellers, provided the advertising Clearly and Conspicuously distinguishes between Vroom's vehicle listings and a Third-Party Vehicle Listing, and provided that Vroom has obtained contractual assurances that the Third-Party Seller is in Possession of Title for the listed vehicle.
• If Vroom advertises a Vehicle Inspection and Reconditioning Process, misrepresenting or failing to disclose the items checked during the Vehicle Inspection and Reconditioning Process.
• If Vroom advertises a Vehicle Inspection and Reconditioning Process, misrepresenting or failing to disclose safety, mechanical, electrical and structural issues discovered by Vroom during the Vehicle Inspection and Reconditioning Process that are not repaired.
• Failing to Clearly and Conspicuously disclose frame or flood damage on the vehicle in the advertisement and listing.
• Failing to Clearly and Conspicuously disclose on the vehicle's listing page significant cosmetic damage that will not be repaired as part of Vroom's Inspection and Reconditioning Process.
• If Vroom advertises that a vehicle has an accident-free vehicle history report from a vehicle history reporting service, failing to (a) Clearly and Conspicuously disclose that the accident-free history is based on the information provided by that reporting service as of the date the vehicle was listed for sale; and (b) Clearly and Conspicuously disclose that such reports do not guarantee that the vehicle is accident-free.
• Failing to maintain processes to apply for the transfer of vehicle title to the purchasing Retail Consumer as required by Texas statute. This provision applies to vehicles sold through Vroom's Texas dealer license, and also applies to Retail Consumers residing in Texas at the time the sales agreement is executed.
• Failing to issue refunds or payoffs for vehicles in connection with a Retail Consumer vehicle return or a Retail Consumer vehicle trade-in by Vroom within thirty (30) days of Vroom being informed that the vehicle has been picked up by Vroom or its supplier.
• Failing to Clearly and Conspicuously disclose before executing a sale that obtaining Special Temporary Tags through the Texas Department of Motor Vehicles statutorily requires a minimum insurance policy that is greater than the amount the out-of-state consumer is required to possess under their home state's vehicle insurance laws. This provision only applies if Special Temporary Tags are available to be obtained by or for the out-of-state consumer, and only in instances where the State of Texas vehicle insurance policy minimum is indeed greater than an individual consumer's respective state vehicle insurance policy minimum.

IT IS FURTHER ORDERED that the State of Texas shall have judgment against Vroom, jointly and severally, in the total amount of $3,000,000 as follows:

1. $2,000,000 in civil penalties pursuant to DTPA section 17.47(c)(1); and B. $1,000,000 in attorneys' fees.

The agreement was for settlement purposes only and should not be considered as an admission of guilt or finding of violation of the law.

For more details, you may visit https://www.texasattorneygeneral.gov/

Beginning in January 2020 to present, the BBB has received complaints and customer reviews which exhibited several different patterns.

In a recent complaint from December 2022, a consumer stated after experiencing issues with her car, they sent her a settlement agreement and "I had to remove any bad reviews and not speak of the situation."

Complaints received from consumers alleged the vehicles they purchased from photos was 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.  Other issues alleged in complaints/customer reviews consumers are not receiving the necessary paperwork to get their car registered, delayed delivery in receiving their car and issues concerning their trade-in.

Since January 2020, the patterns of complaints have not trended down, but have actually increased.  In June 2020, new patterns of complaints were noticed which include warranty issues, deceptive Carfax issues and/or wrecked cars being sold.

Recent 2021 complaints allege issues with 3rd party delivery drivers. Consumers stated the drivers are rude and threatening. 

Consumers have also filed reviews about the many different departments that are set up to assist them, unfortunately, they are being switched around to different departments but are not receiving any assistance. They are often told their cases are being 'escalated' but they feel they are being escalated to no one.

In June 2021, complainants are alleging that due to the delays in getting their registration documents, consumer's insurance companies are dropping coverage.  When they request to speak to a manager, they were put on hold or told there were no managers available.  One consumer stated they threatened to file a lawsuit and was told by an employee, "go ahead with the lawsuit."

Complaint from Sept. 2021 stated consumers were told they would be receiving a refund on their down payment.  After waiting several weeks and not receiving the refund, consumer called and wanted to speak to someone but was told they were not able to transfer the call to the correct person, nor give the person contact information due to company policy.

Beginning in January 2022 up to present time, the following complaints and reviews have been received with the following patterns:  

• Some consumers are being asked for their social security numbers, passports, birth certificates, phone bill, and lease agreements to move forward with the sale. When one consumer refused to provide the sensitive documents, the salesperson was rude, hung up and then failed to refund their money. They had to dispute it with their bank to get resolution. 
• Consumers are reporting their calls and emails are not being returned and in some cases their numbers are being blocked. If they are able to get someone on the line, when they ask for a supervisor, they are told there aren’t any, they are transferred multiple times or hung up on.  It appears their call center may not be located within the US as the agents are hard to understand.  They are rude and consumers feel they are only there to tell you what you want to hear to get you off the line. Consumers have also reported they have left messages for the President of the company, Paul Hennessey, but he has failed to respond to their calls.
• There is still the issue of long delays in consumers receiving their registrations, titles, and plates. One consumer's review stated they have been waiting since 2020 to get their paperwork. Consumers are making payments for a vehicle that is sitting in their driveways as they are unable to legally drive them.  According to complaints/reviews, Vroom has indicated the delays are due to the DMV offices. When consumers reach out to their DMVs, they are told that is not the case and they have received multiple complaints stating the same thing.  One consumer is on their 4 plus temporary tag. When they contacted their local DMV to check status, they were told no paperwork has been received by Vroom and that the company was in violation of their state licensing requirements. DMVs are only issuing so many tags then the consumer is unable to drive their vehicles until they get the needed paperwork. One consumer contacted the local AG’s office and was told to file a complaint with their DMV. Some of the DMVs are telling consumers to file with their local BBB.
• Consumer purchased vehicle in August 2021, when trying to get their registration and plates.  Unfortunately, the company didn’t return their calls or email.  When they move to a different state, they again reached out as they were unable to register the car without the paperwork from Vroom.
• Some consumers whose temporary tags have expired in the state they live are being told they have to purchase Texas tags which caused their insurance to go up. It is not explained to consumers why if they live in another state, they have to purchase tags from Texas.
• Consumers who are in the military have also reported they are unable to park at their installations due to lack of plates.
• Consumers in the health care industry are unable to drive their car to get to their patients without having to find alternative transportation.
• Consumers are now reporting Vroom is telling them they will not receive a refund for their deposit ‘for any reason’ if a sale doesn’t happen.
• Complaints alleged, consumers are highly encouraged to use Vroom’s finance companies to make a purchase; when they refuse and want to continue with their own finance company, the deals are canceled.
• Consumers are also frustrated as their contracts have add-ons that were not authorized or were refused, but were still added to the contract.
• When the cars are delivered, they have immediate issues. They are told by Vroom a ‘case’ will be opened and to send them the estimate for repairs. Unfortunately, the company is not reimbursing the consumer the full amount, they are receiving 50% to 70% of the amount needed to make the repairs.
• Consumers are alleging their contract was canceled by Vroom as they are no longer able to sell vehicles in that state.
• Customer reviews and complaints allege the company promises rental cars while they are assisting getting the tags, but they fail to make any arrangements.
• Recently, one consumer when asking to speak to someone higher than the representative they were currently speaking with was told, “the only one higher than them was God” 
• Consumers are concerned with driving their vehicles without tags. A Vroom representative explained, not to worry as the police are familiar with the issues and are not writing tickets.  If they do get a ticket to send it to Vroom and they would take care of it.  Unfortunately, consumers are incurring tickets they are having to pay.
• One consumer’s truck was 7 days late. He was contacted by the driver stating it wouldn’t fit on the truck and asked if they could drive it to the consumer there as he would it faster.
• In recent complaints, the loan the consumer took out for their auto loan has been open without receiving the paperwork, those loans are being converted into personal loans at a much higher interest rate, sometime 2-3 times higher.
• Consumers feel the company is engaging in delay tactics in order to avoid payments to their lienholders . These tactics include leaving them on hold for more than an hour, giving them fake FedEx tracking numbers that are supposed to be proof the payments have been mailed but when consumer check the FedEx website, the numbers do not exist. Some consumers have stated Vroom is reselling trade-ins that they do not have clear titles for.  Then delaying with the the new owner until they can clear the liens so they will be able to their paperwork for the tags.
• Consumers are also experiencing issues when selling their car to Vroom. The lienholders are not being paid in a timely manner and consumer are having to continue to make payments on a car they are no longer in possession of.
• Consumers are facing the problem of needing their car for their employment such as an Uber driver, but they are legally unable to drive the car due to the delays with the paperwork to get the tags. They need their car to earn an income to pay the car note.
• Consumer in Sacramento, CA was turned away by her DMV office because, "Vroom is very poor at giving all the correct form."
• Consumer sold their car to Vroom who resold it and the old owner is receiving tickets from the new owner because Vroom did not do a title change.
• Consumer paid the deposit for a car, got her information wrong multiple times, sent her another customer's personal banking information, and will not let her speak to anyone ins management.
• Consumer in September 2022 was told by Vroom since they were unable to get anymore temporary tags and the car is till not registered since March 2022, they should just borrow a car from a fried until Vroom sends the paperwork. Consumers sat on hold for over 3 hours twice and now all email inboxes regarding registrations had been shut down.
• Consumer took car to Texas Direct Auto (part of Vroom) for repairs and was told 3 days later to come pick it up as they repair shop was closing and all employees being laid off. When he drove the car home, he found loose parts and screws thrown everywhere. Parts were tied together with zip ties and engine was cracked. He was told there was nothing they could do.
• When consumer purchased car, they received 12 to 13 inquiries on their credit initiated from Vroom. They would not confirm they can remove the inquiries and it dropped their credit score.
• Consumers are still having customer service issues such as reaching the correct department, being hung up on, not being able to understand the representative as they are from another country.
• Consumer's car was delivered with damages. Per consumer Vroom requested consumer get estimate for repairs. Consumer provided documents and company denied it as the estimate was handwritten.
• October 2022 – Consumer was sold a car that had been in a previous wreck. Per Vroom’s website, they will not sell cars that have been in an accident. While they told the consumer they would lower the price, they did not. They also provided paperwork which proved there was an odometer discrepancy.
• November 2022 review stated the company reached out to a consumer who purchased a car for cash in August 2021 and demanded they owed more money threatening collections action. After the consumer sent a detailed response, the company admitted their error.
• Another consumer purchased the company’s Platinum Package warranty but when they tried to use it, they still ended up having to pay $5800 for repairs as the service was not covered entirely.
• In December 2022, a consumer purchased a $1000 warranty for their car but when they tried to use it, they were told they had not purchased a warranty. After he was hung up on multiple times when trying to speak with someone, they told him to pay for the repairs and they would reimburse him. Then they told him they would pay the repair shop directly but unfortunately, they did not pay for the repairs.
• Consumer purchased a car but was unable to get the title as it hadn’t been released by the previous owner. The consumer is claiming they company illegally sold them a car they didn’t actually own.

Following are the complaints and reviews concerning issues for 2023.

• In early January 2023, a consumer stated they purchased a car and was told the title and registration fees would be paid for by Vroom. Two and a half years later, consumer is getting a demand letter for the fees and penalties.
• Consumer was told Vroom would pay for repairs on car that were incorrect but first wanted the consumer to fill out a  W9 tax form.
• Consumer purchase a car in 2018 and it still has not been registered.
• Consumer was having issues with car not being received as advertised and multiple issues. When they were having trouble getting a refund they contacted an attorney. Now Vroom has ‘frozen’ their case and will not longer work with them.
• Consumers are still having issues getting their cars registered as the company is not providing the documents.