The Federal Trade Commission said CarShield will pay $10 million to settle charges over deceptive and misleading advertisements and telemarketing.
The company, which uses athletes and celebrities in its commercials, sells vehicle service contracts that range from about $80 to $120 a month. The FTC said some ads touting repair savings were not accurate, and many customers discovered their repairs weren’t covered.
“Instead of delivering the ‘peace of mind’ promised by its advertisements, CarShield left many consumers with a financial headache,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. “Worse still, CarShield used trusted personalities to deliver its empty promises.”
CarShield said while it disagrees with many of the assertions, it’s committed to helping customers fully understand what they provide. The company said its marketing now includes extra details about typical coverage with full plans listed on its website.
The FTC offers this advice to consumers considering buying a car service contract:
- Never agree to a contract you haven’t looked at first. Look for exclusions that deny coverage or restrict where you can get your car serviced. Does the contract match the coverage the salesperson described to you? If not, walk away.
- You don’t need (or want) duplicate coverage. Check to see if your car is already covered by an existing warranty. You might already have the coverage you were looking to buy.
- Don’t rely on celebrity endorsements alone. It’s helpful to look at reviews from a variety of sources, like trusted websites with impartial expert reviews. Also be on the lookout for fake reviews.
