India Armstrong says her friend was initially skeptical that she could find – and buy – a white, used BMW all online without actually kicking the real tires.
“I’m like ‘Watch, it’s going to work,’ ” Armstrong recalled telling her friend this spring.
“It did not work.”
The 35-year-old Royal Oak, Michigan, resident reached an agreement to buy the BMW from Vroom in late March and took delivery of a 2016 BMW 4-Series on April 12.
But the car that showed up in front of her house via a red-and-white Vroom delivery truck was far from the car of her dreams – the interior had a terrible smell, the tires would need to be replaced and there was this frightening grinding sound as she drove the car around the block.
She immediately contacted Vroom to return the car but never expected that she’d face a seemingly endless headache and string of calls to get her $24,000 in cash back.
At one point she complained: “I have called five days in a row for a total of nine hours with no resolution or a date where the vehicle will be picked up so that the refund process can begin.”
Her frustration isn’t unusual. Vroom – which promotes itself as a painless way to buy a car online – has been racking up an extraordinary number of complaints in the past year, according to the Better Business Bureau.
Hundreds of consumers across the country, including many millennials, grumbled about bad cars that ended up in their driveway after shopping online at Vroom, and many roadblocks to fixing problems or trying to get their money back. Some run up against a $699 nonrefundable delivery fee.
►Car ownership: Owning a new vehicle costs nearly $10,000 a year, AAA says
►Driving in the snow or heat?: Here are the best tires to get for your car
“Every day, we’re getting dozens of complaints. Dozens,” said Dan Parsons, president of the Better Business Bureau of Greater Houston and South Texas. Vroom – which is based in New York and Houston – has a list of Detroit connections.
Parsons dubs the story as “Vroom to Doom in 60 Seconds.”
It has been one of the worst cases involving a pattern of bad customer service that Parsons said he has seen in his 38 years with the BBB.
When reached for comment, a Vroom spokesperson reiterated the company’s refund policy and its ongoing efforts to provide a high level of customer service and improve on that service.
The pandemic has convinced consumers that it’s a snap to buy anything online – even used cars. And this year, skimpy inventories of cars only gave consumers yet another reason to shop beyond traditional avenues, such as car lots and Craigslist.
Vroom reported an outstanding second quarter, noting it sold 18,268 vehicles online in the quarter, up 172% for the quarter, year over year. Vroom is forecasting used car sales in the range of 20,000 to 20,500 vehicles for the third quarter.
Theoretically, the door is wide open for a new kind of e-commerce experience when it comes to used cars. Sometimes, consumers are edgy about trying to buy a car through places like Craigslist where some fraudsters can set up shop.
A Vroom ad that appeared during the Super Bowl played up that angst many car shoppers experience walking into a car dealership. Vroom’s social media ads proclaim: “Find your next car on your phone and get it delivered to you.”
Vroom Super Bowl ad: Bringing car buying into the future
Ad Meter 2021: Vroom’s Super Bowl ad is showing us the future of buying a car
Vroom – founded in 2012 – talks of a painless or frictionless e-commerce experience . But many consumers with grievances, Parsons said, say they would never deal with the company again and wish they hadn’t in the first place.
Overall, Parsons said, Vroom customers appear satisfied with the upfront buying experience. Some say the cars take a bit longer to get than expected.
Those who file complaints, though, find that things started unraveling after the purchase or sale of their own used vehicle to Vroom.
“The complaints now are more ‘I’m broke, I’m in financial trouble,’ ” Parsons said.
One consumer’s plight
Getting a refund on a used car that you buy online isn’t as easy as returning a pair of shoes with free shipping.
Buying a car often requires taking out a car loan and there’s car insurance. If there’s a snag and you can’t drive the car – say there’s a delay in registration, as has been the case for some during the pandemic, or you want to return the car – the outside expenses can keep building while you’re dealing with the return process.
Many upset consumers said they were paying for extra car insurance on a car they didn’t want and had to pay it while waiting for someone to pick it up.
One customer called their vehicle an expensive “paperweight that’s sitting in my driveway.”
Armstrong – who ultimately did get all of her money back – said she was out a few hundred dollars in the process because she had to pay car insurance on a BMW that she couldn’t drive.
Her big fear initially was that she wouldn’t see the refund.
“I was so devastated. It took me so long to save this money,” said Armstrong, an accountant who works for Plante Moran.
She delayed buying a play set for the backyard for her 3-year-old daughter Alexandria. She cut back on eating out, including everything from coffee drinks to steak dinners.
“When I got money, I put it away,” she said. Being able to work from home during the pandemic, she admits, did help her stay in a savings mode.
“We were stuck in the house anyway, so it was kind of good for my savings.”
Eventually, Vroom picked up the car in May and, weeks later, she got all of her money back.
“It took about three months to get a car, hate the car and get my money back,” Armstrong said.
She also received a refund on a $699 delivery fee – a “nonrefundable” fee that a few consumers, but not all, have seen refunded. But there are no guarantees on what is dubbed a “nonrefundable” fee.
A Vroom spokesperson would say only: “If Vroom originally delivered your vehicle to you and you request a return within Vroom’s seven-day (or 250 miles, whichever comes first) policy, we will schedule a time to pick it up and refund the sale price.”
The Vroom contract reads: “You agree to pay the delivery fee and further understand and agree that the delivery fee is nonrefundable once the vehicle has shipped, even if you cancel the order or return the vehicle through Vroom’s return program or otherwise.”
Ultimately, Armstrong found another BMW at a dealership in Waterford that had 50,000 miles on it and she paid $30,000.
Complaints build during explosion in used car sales
Parsons expected the company would have cracked down on its problems this year – especially after the BBB in Texas revoked Vroom’s accreditation in September 2020 at the recommendation of the BBB’s peer review panel, which is the membership committee of the BBB board.
The membership committee and the full, 50-member board of directors – which did not include any car dealers – later reviewed Vroom’s appeal and stood behind revoking Vroom’s membership in the BBB.
But complaints kept building.
“This never changed,” Parsons said. “It got worse.”
Vroom had 1,726 complaints closed in the last three years – and 1,496 complaints closed in the last 12 months. The company has 237 complaints that are currently going through the process and should close in the next 30 to 60 days.
Closed cases, according to the BBB, can include those that are resolved, have received no response from the company, are unresolved between the parties, or the company answered and the consumer didn’t provide feedback of the complaint’s status.
Vroom did not address the revoking of the BBB membership or the level of complaints.
A company spokesperson said only: “We have and will continue to respond promptly to all customer issues, regardless of source or accreditation status, to ensure that our customers are satisfied.”
The company added: “We are committed to enhancing our customer experience and delivering the highest level of customer service. To that end, we continue to invest in our sales and sales support operations, including investments in people, processes and technology.”
Vroom’s Detroit connections
To be sure, cars sales come loaded with complaints overall.
Consumer complaints relating to cars ranked No. 1 in the Top 10 for 2020, based on a survey by the Consumer Federation of America.
People complained about misrepresentations in advertising or sales of new and used cars, deceptive financing practices, defective vehicles, faulty repairs, car leasing and rentals, and towing disputes.
This may explain why another online car seller, Carvana, has had its share of complaints. Carvana’s complaints with the BBB totaled 1,629 in the last three years. Of those complaints, 982 closed in the last 12 months. Carvana has 168 complaints that are currently going through the process of resolving and should be closed in the next 30 to 60 days. But Carvana still is accredited by the BBB and has an A-minus rating.
A Carvana spokesperson said the company is proud of the exceptional customer experiences that it has delivered and put context around the BBB complaints, noting that the company has sold more than 697,000 cars in the last three years.
“All of our vehicles come with a seven-day return policy; an upgrade to the traditional test drive, allowing customers to live with their vehicle for a week to ensure it fits their needs,” the spokesperson said via email.
While Carvana is better known, Vroom’s brand name is building.
Many consumers say Vroom showed up on their radar after seeing a TV commercial or shopping for a car online. Vroom – while based elsewhere – has Detroit connections too.
Vroom said in May that car purchases by metro Detroit Vroom customers increased nearly 163% year-over-year from the previous year, and cars sold to Vroom by consumers soared 189%.
The chair of the Vroom board of directors is a Michigan native, Bob Mylod. Vroom has employees in Detroit and a local delivery hub in Flat Rock.
Vroom announced in May that it was expanding its downtown Detroit office, which then had a team of nearly 50 engineers, designers and product managers responsible for improving the digital experience. The office’s head count has nearly tripled since it opened in August 2019. Vroom has more than 1,000 employees corporate-wide.
Detroit-based Rocket Companies has a Rocket Auto business that has partnered with Vroom since 2017.
Rocket Auto, which grew out of Rock Connections, is one of Vroom’s business partners, and both companies seek to collaboratively advance online auto retailing.
Rocket Auto offers centralized and remote car sales support to national rental and online purchasing platforms, like Vroom. Dan Gilbert, Rocket founder and billionaire, was an early investor in Vroom.
Vroom offers financing through strategic partnerships with Chase (Vroom Financial Services by Chase), Santander and Ally.
The company has said Detroit is important as the company “sits at the intersection of the city’s historical automotive industry legacy and its recent evolution as an innovative tech hub.”
Vroom had been a Wall Street darling last year, but has had some setbacks.
Vroom kicked off an initial public offering of stock in June 2020 with an offering price of $22 a share. On the first day of trading, the stock raced to finish up 118% for the day to close at $47.90. The stock has closed as high as $73.87 a share on Sept. 1, 2020.
But Vroom closed at $29.10 on Aug. 16, down 95 cents or 3.16% for the day.
While analysts have remained optimistic about Vroom’s stock price, consumer complaints continue to build, according to the BBB.
On-hold calls ‘legendary’
Monica Kostoff, 32, who lives in Waterford, said she and her fiancé found a 2019 Cadillac Escalade ESV on Vroom for an amazing $48,000 in late March. The couple has six children between them ranging from age 2 to 17, and she’s expecting a baby boy in December, so they needed the room of an extended length vehicle.
They got a car loan at their credit union, filled out all the paperwork and everything seemed good to go until it wasn’t.
Shortly after a cashier’s check was overnighted to Vroom, the couple received a notice from Vroom that another $4,000 was due. No delivery date had been set.
“I was like ‘What is this?’ ” Kostoff said. “They literally had no explanation for anything.”
She said they were frustrated because they had a contract that didn’t include this extra $4,000 and ultimately decided it was a no-go.
They ended up spending $54,888 on a similar 2019 Cadillac Escalade ESV from a dealership in St. Clair Shores. While the Vroom price was lower, Kostoff said they weren’t sure when they’d get the car through Vroom and did not understand the extra costs.
And then, she said, there were delays getting the money back that was sent by the credit union and hassles dealing with customer service.
Ultimately, they did get the money. They never took delivery from Vroom.
“There was never a single time I called and got a direct answer,” Kostoff said. “I literally probably spent over 40 hours on the phone on hold with them.”
Some consumers said that they received vehicles that were far different from the picture they saw online.
Often, cars were delivered at night, according to customers, so they did not initially notice some damage.
Others received the vehicles, but they still don’t have vital paperwork and are having trouble getting their cars registered after lengthy delays.
Consumers talk of emailing dozens of times with absolutely no response. They complain of waiting on the phone for hours at a time with customer service.
“The on-hold stories are legendary,” the BBB’s Parsons said.
Vroom said it strives to be transparent and clear in the pricing and sales process. The company is governed by the relevant state and federal level statutes, a spokesperson said.
The Vroom spokesperson said all vehicles pass a safety and quality inspection and come with a free CarFax vehicle history report.
If a customer lives in an area that cannot accommodate the delivery truck, the Vroom team will arrange to meet the customer at a nearby location for delivery, according to the company.
Some people have complained about a lack of registration help and an inability to get a license plate during the pandemic.
A Vroom spokesperson said every local department of motor vehicles is different and some are still experiencing pandemic-induced backlogs.
“Our registration and titling team is constantly working on processing registrations and license plates as quickly as possible,” the spokesperson said.
Another tale of woe
David Clem, 30, says he bought a 2018 Volvo XC60 on a bit of a lark through Vroom. But there was nothing fun about it and he’s still looking for a used car.
Clem, who works as a software development manager in the IT space, said he and his fiancée were able to get by with one car for eight or nine months during the pandemic. But as social activities began resuming in 2021, he felt it was time to get a second car.
The Volvo that arrived curbside in June at his home in Grosse Pointe was sharp. The interior was nice. And it was a decent deal at $37,000 for a car with 33,000 miles.
But he says he only ended up driving the Volvo for about 10 miles total. Everything ran great, he said, until he went more than 45 mph.
“The second I got on the highway, I knew something was up,” Clem said.
He later took the car to a local shop, which indicated that something was wrong with both front axles, perhaps due to a mishap with towing at some point.
“I was shipped a lemon, basically,” Clem said.
Clem, who said he has family members who sell cars, said he thought the online process would work because the site seemed to have a lot of cars at a time of a used car shortage. He financed the car through Chase.
It was bad enough, he said, that the car wasn’t good but it proved to be highly frustrating getting someone to address the return of the car and a refund.
“I triggered the return process by sending an email and I didn’t get a response for two weeks,” he said. “There was no confirmation. There was nothing that really indicated that they had acknowledged my return.”
“We were looking to solve one problem and it created another,” Clem said. “The return process was a black box. It felt very hopeless.”
Ultimately, he did get his money back – plus a $699 delivery fee.
Yet even consumers, like Clem, who ultimately see their issues resolved say the hassle just was far more than they had ever imagined. What started out as timesaving strategy, they said, ended up demanding way too much time.