The Deceptive Practices of CarShield: A Settlement with the FTC
The Federal Trade Commission (FTC) recently announced that CarShield has agreed to pay $10 million to settle charges of deceptive advertising and telemarketing practices related to their extended car warranty plans. This settlement comes after numerous customer complaints regarding the lack of coverage for repair claims despite paying monthly fees of up to $120.
Deceptive Advertising Tactics
The FTC found that CarShield’s advertising, featuring celebrities like Chris Brown and Ice-T, made false statements regarding the extent of coverage provided by their vehicle service contracts. Many ads claimed that all repairs, including those to essential systems like engines and transmissions, would be covered. However, consumers often discovered that the repairs they thought were covered were actually not, causing financial distress.
FTC’s Response and Settlement Terms
In response to the deceptive practices, Samuel Levine, director of the FTC’s Bureau of Consumer Protection, emphasized the importance of holding advertisers accountable for preying on consumers’ financial anxiety. The settlement with CarShield and their administrator, American Auto Shield LLC, includes provisions to prevent future deceptive advertising and ensure the accuracy of all testimonies, including those from celebrities.
Recommendations for Consumers
The FTC recommends that consumers conduct thorough research before purchasing an auto service contract. Key reminders include:
- Verify Contract Details: Check for exclusions and ensure the coverage matches what was described to you by the salesperson.
- Avoid Duplicate Coverage: Confirm if your car is already covered by an existing warranty to prevent unnecessary purchases.
- Look Beyond Celebrity Endorsements: Seek reviews from various sources to get unbiased insights and watch out for fake reviews.
By following these recommendations, consumers can make informed decisions when considering auto service contracts and avoid falling victim to deceptive advertising practices similar to those of CarShield.
