Car Shield Fined $10M Over Deceptive Radio/TV Commercials

CarShield, a company that sells vehicle service contracts to automobile owners that it claims will cover the cost of certain repairs, has agreed to pay $10 million in a settlement with federal regulators over charges that its marketing tactics were deceptive and misleading.

In a statement Wednesday, the Federal Trade Commission said CarShield, which employs celebrity endorsers including rapper and actor Ice-T and sports commentator Chris Berman, had falsely lured customers with the promise of "peace of mind" and "protection" from the cost and inconvenience of vehicle breakdowns through its contracts.

NBC News also reports the FTC charged American Auto Shield, LLC (AAS), the administrator of CarShield's vehicle service contracts, in the scheme.

The agency said that at least one ad, which 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 touted CarShield contracts as "your best line of defense against expensive breakdowns."

Yet many purchasers discovered that their repairs were not covered, despite making payments of up to $120 per month for CarShield's product, the FTC said. 

"Instead of delivering the ‘peace of mind’ promised by its advertisements, CarShield left many consumers with a financial headache," Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a statement.

"Worse still, CarShield used trusted personalities to deliver its empty promises," Levine said. "The FTC will hold advertisers accountable for using false or deceptive claims to exploit consumers’ financial anxieties.”

In a statement, CarShield said that while it disagreed with "many" of the FTC's assertions, it shares the agency's "commitment to helping customers fully understand exactly what we provide and the value we offer."