The Federal Trade Commission said late Tuesday that it took enforcement actions against Vroom for misrepresenting that the retailer thoroughly examined all vehicles before listing them for sale. The FTC also said Vroom failed to obtain consumers’ consent to shipment delays or provide prompt refunds when cars weren’t delivered in the time the retailer promised.

According to a news release from the FTC, 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 alleged 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.

The FTC said 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 FTC said.

The complaint also noted 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, the FTC said 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 cited instances where consumers have had to wait as much as three months or longer before their car arrived.

As a 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 vehicle 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 alleged that Vroom failed to provide the Buyers Guide until late in the purchase process, and that the guides were often missing required information.

Furthermore, the complaint alleged 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,” the FTC said.

Under the terms of the proposed settlement, the FTC said 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. The settlement also 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 FTC 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.

The regulator said it 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 FTC that a proceeding is in the public interest.

The FTC added that stipulated final orders have the force of law when approved and signed by the district court judge.