DRIVERS are finally getting their cut from a $1 million settlement with an online car dealer that was sued over shipment delays.
The Federal Trade Commission is sending out over $934,000 in refunds to thousands of consumers burned by the business.
Drivers who used online retailer Vroom could be getting a massive payout in the mail after the company was sued and shuttered.
Vroom was sued by the FTC in July 2024 for misleading buyers and failing to meet key consumer protection rules.
The online used car seller was accused of violating several rules with its shady business practices, including failing to thoroughly inspect rules before listing them.
It also reportedly did not get buyers’ consent for delays or issue refunds quickly when cars weren’t delivered as promised.
The complaint further alleged that Vroom failed to provide the legally required Buyers Guide upfront, often leaving out key warranty information.
“Vroom promised the fast deliveries of thoroughly inspected cars, but sped right past compliance,” then-FTC Bureau of Consumer Protection Director Samuel Levine said while announcing the proposed settlement in July.
“Online car dealers and other internet sellers must provide required disclosures just like any brick-and-mortar businesses that comply with the law.”
Consumers impacted by Vroom’s delivery failures were identified based on FTC investigations and complaints.
As part of the settlement, Vroom must now stop misleading consumers about inspections and shipping and ensure all necessary disclosures are provided.
“The FTC’s allegations relate to pandemic-era challenges that arose in the Company’s discontinued e-commerce operations,” the Vroom spokesperson told PYMNTS.
“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.”
A total of 20,361 consumers will receive checks as part of the payout.
Recipients should cash their checks within 90 days of the issue date.
The Better Business Bureau has also documented years of complaints against Vroom.
What's a class-action settlement?
Class action lawsuits offer groups of people, or 'classes,' a way to band together in court.
These suits are often brought by one or a few people who allege a company or other entity has wronged a large group of people.
When a suit becomes a class action, it extends to all “class members,” or people who may have similar complaints to those who filed the suit.
Companies often settle class actions – offering payment to class members who typically waive their right to pursue further legal action by accepting money.
These payout agreements frequently include statements by the defendant denying wrongdoing. Companies tend to settle class actions to avoid the costs of further litigation.
Pollution, discrimination, or false advertising are a few examples of what can land a class action on a company’s doorstep.
In the past three years, the BBB has closed 4,792 complaints regarding the company, reported Komo News.
A BBB report flagged a “pattern of complaints” dating back to 2020, citing issues where customers claimed the vehicles they received did not match the ones advertised.
Some reported cars arriving with body damage, dirty interiors, or other undisclosed defects.
Others said their vehicles were dropped off at night, making it difficult to inspect them upon delivery.
Some even found their cars abandoned in parking lots or driveways with the keys left inside.
Customers also described persistent difficulties in reaching Vroom’s customer service to resolve their concerns.
Despite advertising that vehicles would be delivered within 14 days, the FTC’s complaint stated that some buyers waited over three months for their cars to arrive.
As part of the settlement, Vroom did not admit wrongdoing but agreed to pay the FTC $1 million. These funds will be distributed as refunds to affected consumers.
In 2024 alone, the FTC secured more than $337 million in refunds for consumers across the country.
Vroom, which offers vehicles online and delivers them nationwide, has faced criticism over its business practices before.
In January 2024, Vroom ceased operations of its eCommerce platform for purchasing and selling used cars.
However, the company still manages United Auto Credit Corp, an indirect automotive lending firm, and CarStory, a provider of digital solutions for automotive retail.
The FTC reminds consumers to be wary of scams, official refunds never require payment or personal financial details.
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