The Missouri-based company, also known as NRRM LLC, advertises and sells vehicle service contracts to consumers throughout the United States for approximately $80 to $120 a month, according to the FTC’s complaint.
The company ran television advertisements featuring celebrity endorsers, including actor Ice-T, sportscaster Chris Berman, Los Angeles Dodgers pitcher Walker Buehler, and TV host Adrienne Janic. The celebrities were not accused of any wrongdoing.
In the advertisements, CarShield promised consumers “peace of mind” and “protection” from the cost and inconvenience of vehicle breakdowns if they purchased the company’s service plan.
The company’s advertisements also claimed that all repairs to “covered” systems, such as the engine and transmission, would be included under the vehicle service contracts (VSCs). The ads also used language that makes consumers “believe CarShield will pay for all necessary repairs,” the FTC said.
In one advertisement that the company ran on television 18,000 times, it states, “With CarShield’s administrators, they make sure you don’t get stuck with expensive car repair bills like this.”
‘Plans Contain Myriad Exclusions’
Some of CarShield’s customers discovered many repairs were not covered by the contract, the FTC said.“Instead, the plans contain myriad exclusions,” the FTC said. “Consumers with denied claims receive no rental car, while many consumers with ‘approved’ claims must pay a portion of their rental car costs.”
The FTC found CarShield’s advertisements and telemarketing for its VSCs were “deceptive and misleading.”
The settlement also covers American Auto Shield LLC (AAS), the administrator of CarShield’s VSCs.
Under the agreement, CarShield and AAS are banned from making deceptive and misleading statements in the future. They must also ensure their endorsers’ testimonials are truthful, accurate, and not deceptive.
They are also prohibited from failing to make required disclosures and from violating the FTC’s telemarketing sales rule.
The $10 million will be used to provide refunds to defrauded consumers, the FTC said.
CarShield did not admit or deny wrongdoing in agreeing to settle.
“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,” the director of the FTC’s Bureau of Consumer Protection, Samuel Levine, said.
“Instead of delivering the ‘peace of mind’ promised by its advertisements, CarShield left many consumers with a financial headache. Worse still, CarShield used trusted personalities to deliver its empty promises.”
In a statement to media outlets, CarShield’s general counsel, Michael Carter, said that while the company disagreed with many of the FTC’s claims, it was committed to helping consumers understand what they are paying for, including providing clear information on its website.
Carter added that CarShield is “making very clear that all spokespeople in [CarShield’s] ads are actual CarShield customers.”
The Epoch Times contacted a spokesperson for American Auto Shield for comment but didn’t receive a reply by publication time.
