CarShield Hit By The FTC For Deceptive Advertising

CarShield, known for providing vehicle service contracts to supposedly help car owners avoid shelling out big for future repairs, is paying a $10 million fine as part of a settlement agreement with the Federal Trade Commission. That money apparently will be in part going to defrauded customers.

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You’ve probably seen ads for the company with celebrities like Ice-T and sports commentator Chris Berman endorsing the service, but in an official press release the FTC said those and other practices got the company in hot water.

We know among car enthusiasts, service contracts like these are a hotly debated topic. Some think they’re worth buying, but others believe they’re just a scam. This development is only going to pour fuel on the fire when it comes to that debate.

According to the FTC, CarShield’s advertisements portray three deceptions to consumers. They are that all repairs or vehicle systems covered by the service contract will be paid for, those with the service will get a rental car at no additional cost when their ride is in the shop, and that customers will be able to use the repair shop of their choice.

That last one was found by the FTC to be especially deceptive since many businesses won’t work with CarShield. What’s more, the regulatory agency concluded that not a single plan from the company covers all repairs or fixes for systems that are supposedly covered.

We were already aware that quite a few vehicle warranties have all kinds of loophole language which makes getting coverage for different repairs more difficult, if not impossible. That doesn’t mean all are that way. It’s great this case is helping to expose this fact and we hope people realize the problem goes beyond just CarShield.

As for the rental car coverage, even with an approved claim customers still have to pay at least some of the fees, says the FTC in its release.

The settlement isn’t just monetary. CarShield has agreed to alter its advertising and telemarketing practices to avoid the deceptions as outlined by the FTC.

Image via CarShield/Facebook

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