Have you had that feeling of, “Well, at least I’m not alone?”
Those of you following TFLcar may well be aware of our recent experience with online car retailer Vroom. In essence, they offer the same schtick as Carvana and even CarMax (with their delivery/pickup options). No-hassle shopping, no-haggle pricing, and convenient delivery right to your driveway. You would think that process would be a cakewalk in our new pandemic landscape, but we didn’t have that experience, as you can see if you check out the videos below. Now, though, Vroom in particular is facing its own problems at the moment. Particularly, the company is facing a class-action lawsuit for allegedly engaging in securities fraud — misleading investors about its financial health. Vroom announced its fourth-quarter 2020 results on March 3, where it posted a whopping 41.9 percent in net losses ($60.7 million), even while overall revenue grew by 14.1 percent, to just over $400 million.
Through Businesswire, the legal firm suing Vroom released a brief outline illustrating its complaints against the Texas-based company:
Editorial: Vroom faces ire from its own customers
Now, it’s likely you (much like TFL) aren’t part of the class looking to extract damages from Vroom. If you’re not an actual investor in the company, then whether they committed any fraud hardly matters to you. What that lawsuit does reveal, though, is a cause-and-effect relationship stemming back to consumers. That is where our experience comes in. Back in February, we sent a $63,000 cashier’s check to secure a used 2015 BMW i8. In short, Vroom lost that check, many back and forths were had, and eventually, we decided to just get our money back and try to forget the whole ordeal. If you aren’t up to speed, I did post more details on our original issue in an earlier piece.
I do want to make clear, Vroom did resolve our issue, but boy did we have to fight to get there. And we were hardly alone — many of you also reached out with your own experiences after we aired our original video on February 18. One email from a viewer stuck out to me.
Here, they didn’t lose a check, but they lose the car this customer intended to buy:
Vroom had its BBB accreditation revoked
There’s nothing wrong with trying something different, and some folks want to bypass the traditional (more often than not, painful) dealer experience. Another litmus test to consider before pulling the trigger, though, is the business’ standing with the Better Business Bureau. Or, if you don’t trust their ratings or accreditation, look at complaints and testimonies. Just on first glance, Vroom netted an average customer review of 1.26 out of 5 stars. What’s more, they’ve also gotten 730 complaints over the past three years — many of them touching on the same issues outlined above. Lost payments, lost paperwork, lost vehicles and slow, spotty communication to resolve all of it.
Our friends over at Jalopnik hit on the fact that Vroom is a small fish, comprising far less than 1 percent of the used car sales market. It’s understandable that the company would struggle financially — validity of its earlier, lawsuit-instigating claims notwithstanding — but its most recent legal woes may be a culmination of a years-long chain of bad decisions, rather than a kicking-off point.
Running afoul of your customer base will inevitably cause some pain. Even with some efforts to right the PR ship, though, Vroom’s stock plummeted 28 percent on March 4, after the fourth-quarter results. The stock has recovered slightly over March, but the story is looking grim, especially as the reviews aren’t looking any more rosy than our own experience last month.