In July 2024, Vroom entered into a settlement with the Federal Trade Commission in the amount of $1 million, with the FTC issuing refunds to consumers from the settlement monies at the beginning of March 2025. The FTC’s allegations against Vroom were that it participated in deceptive and unfair acts or practices regarding inspections and shipping of vehicles, failure to conspicuously display the Used Buyers Guide and failure to provide written warranties prior to sale to consumers. In the FTC’s statement and the complaint against Vroom, the FTC claims that: • Vroom advertised that its cars underwent “multiple inspections,” including listing 184 points of inspection that were checked by Vroom for every car sold, but consumers had various complaints about the vehicles that told a different story of the condition of the vehicles; • The required Buyers Guide, which lists a dealer’s basic warranty 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 — was not provided until late in the purchase process and often were missing required information; and • Vroom also failed to provide the terms of its warranty on its website in close proximity to the warranted used vehicle and it didn’t inform consumers how they could obtain the warranty’s terms prior to the receipt of the sale documents. Often claims of fraud against dealerships result from the sale of used vehicles rather than new vehicles, and the Vroom settlement is a lesson for all dealers when it comes to how used vehicles are advertised, if they are advertised as “certified” and thoroughness of warranty disclosures So about those used vehicles … INSPECT ALL USED VEHICLES Too often, used vehicle managers cannot wait to get used cars onto the front line, and that means dealership employees are not taking the time to thoroughly inspect them beforehand. If that’s happening in your dealership, it’s a problem. Most used vehicle managers will argue that they review the vehicle history report or maybe even the title history for the vehicle. Since those show no problems, they see no reason to inspect a vehicle they wish to retail. However, there are lots of reasons why a problem with a vehicle doesn’t show up on a vehicle history report. Perhaps the issue with the vehicle — damage or flooding for example — was not reported to an insurance company and was repaired by the owner out of pocket. Or perhaps the vehicle history report company is delayed in updating recent damage or flooding to the report prior to the dealership’s sale of the vehicle. For many reasons, a clean vehicle history report does not mean that a vehicle has not had problems. CARFAX reports specifically state that “This CARFAX Vehicle History Report is based only on information supplied to CARFAX and available as of [Date] at [Time]. Other information about this vehicle, including problems, may not have been reported to CARFAX. Use this report as one important tool, along with a vehicle inspection and test drive, to make a better decision about your next used car.” More importantly, a clean vehicle history report does not absolve a dealership from failing to follow its obligations under the law, a reminder underscored by the recent Vroom settlement. Title histories may also be misleading. The fact that a vehicle has never been titled in the name of an insurance company doesn’t mean that the car was never declared a total loss. Insurance companies have been known to simply “skip title” by arranging a purchase from the owner of a seriously damaged vehicle directly to a subsequent owner (if it has been fixed) or to someone who will fix it for resale (if it has not been repaired). An insurance company’s name sometimes never shows up on the title history of a totaled vehicle. There are a number of reasons you must carefully inspect the used cars you sell at retail: • Floods: Take 2024 for example, with storms and flooding in various parts of the United States, (i.e., Florida and North Carolina), there are many cars that have suffered flood damage. It’s important for dealers to remember that vehicles may become “flooded” even if they were not partially submerged in standing water. Many vehicles suffer flood damage from hard rains that damage interiors through open windows or through windows and sun/moon roofs with poor or damaged seals that allow rainwater to leak in, causing extensive damage. The fact that its flooding hasn’t yet appeared on a vehicle history report doesn’t mean the car that dealers are buying isn’t a flood car. However, you won’t see those if you don’t carefully inspect the vehicle. • Serious Damage: Plaintiffs’ lawyers love to sue dealers over used vehicles that have suffered previous damage without About Those Used Vehicles … By BARRIE CHARAPP BEATY, Charapp & Weiss LLP 16 Virginia Auto Dealer
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