CarShield, a company providing contracts to drivers that claim to cover the cost of certain repairs, has reached a $10 million settlement with the Federal Trade Commission over allegations of misleading advertising, reports NBC News.
A television ad from the company, which had been broadcast 18,000 times, claimed the contracts would protect drivers from unforeseen vehicle repair expenses. It recruited celebrity spokespersons, such as rapper and actor Ice-T and sports commentator Chris Berman, to also market this message to consumers.
However, many drivers who enlisted coverage from CarShield ended up not seeing the return, having repairs go uncovered even though they were making payments of up to $120 a month.
CarShield has stated it does not share FTC’s views on its marketing practices, though it has implemented some improvements. The company said it provides more information on what repairs are typically covered now and has made full plans easier to view prior to making a purchase.
“Instead of delivering the ‘peace of mind’ promised by its advertisements, CarShield left many consumers with a financial headache,” said Samuel Levine, director of FTC’s Bureau of Consumer Protection. “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.”
