At Charapp & Weiss, we’ve seen it time and time again: dealerships find themselves in legal trouble because they didn’t take the time to get the basics right. The recent $1 million settlement between Vroom and the FTC is a perfect example. Vroom’s case involved misleading claims about multi-point inspections, failure to disclose warranty terms, and late delivery of required Buyer’s Guides. The result? Refunds for consumers, a tarnished reputation for the company, and a cautionary tale for the rest of the industry.
This case is a clear reminder: used vehicle sales come with unique risks, and it’s critical to handle them properly.
Inspections: The Cornerstone of Used Vehicle Compliance
A clean CARFAX® report does not mean a clean bill of health for a used car. Damage and issues can slip through the cracks—especially flood damage from storms like those we saw in 2024 across Florida and North Carolina. Water damage often goes unreported, and the problems it causes can take months to surface.
Every dealership should:
- Inspect every used car thoroughly before it hits the lot.
- Put vehicles on a lift to check for undercarriage and frame damage.
- Look beyond the paperwork—title histories and vehicle reports can miss prior accidents, repairs, or flood events.
Skipping inspections invites lawsuits from customers and attention from regulators. Plaintiffs’ attorneys are eager to pounce on a story where a dealer sold a damaged car without disclosing its history.
Certification: It’s More Than Just a Label
If you use the term “certified,” you’d better mean it—and you must explain it.
- Manufacturer CPO Programs: Follow the manufacturer’s rules to the letter. This includes inspections by certified technicians, proper documentation (sometimes for up to seven years), and providing service history reports to customers.
- In-House Certification Programs: Be transparent. What does “certified” mean under your program? Have clear standards—does it mean the car is free of flood damage, frame damage, and non-OEM parts? If you can’t define it, you can’t advertise it.
Remember: consumers assume “certified” means manufacturer-backed. If it’s your own program, say so clearly in ads and on the lot. Failure to disclose opens you up to claims of misrepresentation.
The Buyer’s Guide: A Legal Must-Have
Every used vehicle must have a Buyer’s Guide—no exceptions. It should:
- Clearly state whether a warranty is provided or if the car is sold “as is.”
- List the basic terms of any warranty.
- Be signed and dated by the customer in states like Virginia—or as a best practice everywhere.
- Be backed up by a separate written warranty if you’re providing one; the Buyer’s Guide is not the warranty itself.
The FTC’s Used Car Rule isn’t optional. Noncompliance leads to fines, lawsuits, and regulatory scrutiny.
The Importance of Customer Complaint Handling
Economic uncertainty is driving up customer complaints. Many are related to dealership practices—misleading pricing, failure to disclose terms, or delays in resolving issues.
Every dealership should have a complaint handling process that:
- Logs and tracks all complaints, whether direct or through a regulatory agency.
- Assigns responsibility for follow-up.
- Views complaints as opportunities to improve processes and customer satisfaction.
Customers turn to regulators when they feel ignored. Don’t give them a reason to escalate—handle complaints proactively and thoroughly.
Ethics and Compliance: The Foundation of Success
It’s time for dealerships to recommit to the basics. That starts with a clear Standards of Conduct policy signed by every employee. Key points should include:
- Compliance with all laws and regulations—federal, state, and local.
- Honesty, integrity, and fairness in all business dealings.
- No pricing games—customers must be able to buy vehicles at the advertised price without financing contingencies.
- Transparency in advertising and sales—no deceptive practices or hidden conditions.
- Accountability—every employee is responsible for their actions, even if directed by a manager.
Create a culture where employees report violations and know they will be protected from retaliation. That’s how you build a compliant, ethical dealership.
Final Thoughts
The lessons from the Vroom settlement are clear: shortcuts on used vehicle sales can cost your dealership dearly. At Charapp & Weiss, we’re here to help you navigate these challenges, avoid legal pitfalls, and build a dealership known for integrity and trust.
Inspect your vehicles. Disclose your terms. Train your staff. And when in doubt—ask for help. We’re here for you.
