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By Matthew Impelli
Life & Trends Reporter
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CarShield will be required to pay a $10 million fine to the Federal Trade Commission (FTC) over a case involving deceptive advertisements.
The Associated Press (AP) on Thursday reported that the FTC found CarShield in violation of using "deceptive and misleading" advertisements for its extended warranty on automobiles.
"Many purchasers found that many repairs were not 'covered,' despite making payments of up to $120 per month. The FTC also alleges CarShield's celebrity and consumer endorsers made false statements in its ads," the FTC said in a press release.
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Samuel Levine, the Director of the FTC's Bureau of Consumer Protection said that "for many consumers, a personal vehicle is one of their most valuable assets and a vital lifeline for getting to work, taking their kids to school, and obtaining medical care. Instead of delivering the 'peace of mind' promised by its advertisements, CarShield left many consumers with a financial headache."
He added, "Worse still, CarShield used trusted personalities to deliver its empty promises. The FTC will hold advertisers accountable for using false or deceptive claims to exploit consumers' financial anxieties."
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The FTC said in a press release that the complaint also requires CarShield and American Auto Shield, LLC (AAS) from creating any future "deceptive and misleading statements," while also ensuring that "their endorsers' testimonials are truthful, accurate, and not deceptive."
"The complaint alleges many ads claim that all repairs or repairs to 'covered' systems, such as the engine and transmission, will be covered and use language that makes consumers believe CarShield will pay for all necessary repairs," the FTC said. "For example, one ad that ran 18,000 times on television stated, 'With CarShield's administrators, they make sure you don't get stuck with expensive car repair bills like this.' It also touts CarShield VSCs as 'your best line of defense against expensive breakdowns.'"
According to the AP, NRRM LLC operates under the CarShield name and AAS does the vehicle service contracts for CarShield.
In a release obtained by the AP, CarShield responded to the complaint by saying that "while we disagree with many of the assertions from the FTC, we share their commitment to helping customers fully understand exactly what we provide and the value we offer.
"That's why we were glad to work alongside the agency to answer their questions and carefully examine ways to improve our communications with customers."
CarShield also noted that updated marketing will provide customers with further details about the repair needed for their vehicle and will also send customers directly to the CarShield website where they can look over different plans before purchasing one, the AP reported.
Newsweek reached out to CarShield via its website on Thursday for further comment.
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