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If you haven’t caught CarShield’s pervasive ad campaign for vehicle service contracts, you may be one of the few people who should spend more time watching TV. Ubiquity aside, what you really need to know about CarShield’s ads is that the FTC has challenged them as deceptive. A $10 million proposed settlement addresses allegations that the company made misleading claims about what the service contracts cover, deceptively represented that consumers could get repairs at the shop of their choice, used deceptive celebrity and consumer endorsements, and violated the Telemarketing Sales Rule.

The complaint names two related players behind the CarShield promotions. Defendant American Auto Shield determines the purported coverage and eligibility criteria for each vehicle service contract type, ranging from the “Silver” plan all the way up to the “Diamond” plan, with consumers shelling out between $80 to $120 per month. According to the complaint, American Auto Shield is responsible for adjudicating and paying customers’ claims. Defendant CarShield creates the ads and manages the marketing, although the parties’ contract gives American Auto Shield a significant say in the content.

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FTC CarShield complaint illustrations

CarShield’s ads allegedly conveyed that the vehicle service contracts protect consumers from unexpected repair costs after their manufacturer’s warranty has expired. The ads pitched “protection” and “peace of mind,” promising customers “you’ll never pay for expensive car repairs again.” In addition, the ads got specific with the kind of coverage consumers can expect. According to one ad, “CarShield has plans that can help cover major parts and systems for out-of-warranty vehicles. So when they break down, you’re not the one stuck with the bill.” Promising “no big bills,” another ad claimed, “If my car breaks down, I can count on CarShield to cover it for me.”

In addition to touting their own Shield Repair Network of repair facilities, the defendants assured consumers that “When your car needs repair, you take it to your favorite mechanic or even your dealer, and CarShield gets them paid directly.” According to the company, “There are even plans that will pay for your rental car while your car’s in the shop.”

For consumers still on the fence, CarShield featured endorsements by professional athletes, including basketball player Allen Iverson, pro wrestler Ric Flair, and baseball players Walker Buehler, Pete Alonso, and Matt Vierling. Other ads showcased sportscaster Chris Berman and actors Ice-T, Vivica A. Fox, Adrienne Janic, and Ernie Hudson – all of whom were represented to be “customers” or even “real CarShield Customers.”

The ads also highlighted consumers making specific claims about how much money they saved through a CarShield vehicle service contract. According to one consumer, “I’ve been a CarShield customer for close to seven years, had three vehicles covered, and they saved me close to $9,000.” Another consumer claimed that “If I didn’t have CarShield, I would have been out-of-pocket $7,000.”

All the TV ads – as well as promotional mailings – feature a phone number for consumers to call if they have questions or want to enroll. According to the complaint, once telemarketers have consumers on the line, they work from approved scripts to turn up the temperature on the sales pitch. For example, telemarketers promised consumers that with the Diamond plan, “[J]ust like when the vehicle was NEW, this covers your Engine, Transmission, Drive Axle, Suspension, Steering, Fuel System, A/C, and even your Computers and High-Tech Electronics!” Consumers also were told they could “pick the dealer or ASE certified mechanic you want to use, and there is just a $100 deductible for any covered repair!” and that their vehicle service contract includes a rental car “at no extra cost.” According to the complaint, consumers who didn’t sign up during that initial call could expect to get multiple follow-up calls from CarShield telemarketers designed to seal the deal. It was only after buying a vehicle service contract that consumers received a dense 25-30 page document packed with exclusions, terms, and conditions that weren’t disclosed in CarShield’s ads or by its telemarketers.

What happened when the rubber met the road? The FTC says it wasn’t until many consumers’ cars broke down and they tried to exercise their rights under their vehicle service contracts that they learned the defendants deliver substantially less than what was promised. According to the complaint, “In many cases, only after experiencing a vehicle breakdown and attempting to use their [vehicle service contracts] do consumers realize the representations made by CarShield’s advertisements and telemarketers are false or misleading.”

For example, despite the defendants’ assurances, many consumers couldn’t use the facility of their choice for repairs. According to one consumer, “Everyone laughs when I ask if they accept CarShield as coverage.” Another consumer reported, “[I] called around, no shop within reasonable distance will accept CarShield. Answer from each shop has been ‘no, because they don’t pay their bill.’” Other consumers claimed that even some facilities the defendants advertised as members of their Shield Repair Network want nothing to do with CarShield.

If consumers were able to find a repair shop willing to accept CarShield vehicle service contacts, in numerous cases, American Auto Shield has invoked a host of exclusions that aren’t clearly disclosed in CarShield’s ads or by its telemarketers. In fact, none of CarShield’s service contracts cover all repairs or even repairs to “covered” vehicle systems. The upshot: the FTC says many consumers who paid big money for vehicle service contracts were left holding the bag – and paying the bill – for pricey repairs the defendants had led them to believe would be covered.

The complaint alleges that the defendants violated the FTC Act by making misleading claims about what their vehicle service contracts covered, by falsely promising consumers could use the repair shop of their choice, and by making deceptive promises that customers would have access to rental cars. The FTC also says the defendants’ testimonials were deceptive in that the celebrities either weren’t actual customers or had never used a CarShield vehicle service contract. According to the complaint, the consumer testimonials were misleading because the people didn’t actually save the depicted dollar amounts. In addition, the FTC alleges the defendants’ misrepresentations and omissions violated multiple provisions of the Telemarketing Sales Rule and that American Auto Shield also assisted and facilitated TSR violations.

In addition to $10 million in redress for consumers, the proposed settlement prohibits CarShield from making misrepresentations related to any goods or services, prohibits misrepresentations about endorsers’ experience with a product or service, and requires American Auto Shield to tell third-party marketers about the order and to monitor their advertising. The settlement also requires compliance with the Telemarketing Sales Rule. 

The action offers across-the-board compliance advice for other businesses.

Explain the details of the deal up front. A vehicle service contract is no different from any other consumer transaction. It’s the company’s responsibility to be crystal clear about material terms and conditions before the consumer makes the purchase. According to the FTC, the defendants had ample warning that consumers were surprised by the numerous exclusions. In addition to public alerts issued by two BBBs, CarShield reached settlements with Missouri and Georgia regarding their practices. The FTC lawsuit also cites internal corporate communications about a “pattern of . . . complaints regarding coverage misunderstandings.” Of course, the wisest course of action is to make sure the details of the deal are clear from the outset. But conscientious companies also monitor consumer complaints and discontinue tactics that cause confusion.

Has your company received a Notice of Penalty Offenses from the FTC? Take it seriously. In September 2022, the FTC sent CarShield a Notice of Penalty Offenses Concerning Endorsements, identifying certain practices the Commission has determined to be deceptive or unfair – specifically, falsely representing an endorser as an actual user of a product or service. But even after receiving the Notice, CarShield allegedly continued to deceptively describe certain athletes and celebrities as customers or users. If your company has received any of the FTC’s Notices of Penalty Offenses, conduct a compliance check to make sure your practices comport with the law.

Review your obligations under the Telemarketing Sales Rule. “But we don’t cold call random people during the dinner hour, so the Telemarketing Sales Rule doesn’t apply to us.” We’ve heard that from too many businesses that have ignored the broad scope of the TSR, which defines “telemarketing” in part as “a plan, program, or campaign . . . to induce the purchase of goods or services.” Certainly, those unwanted and annoying calls consumers complain so much about are subject to the Rule, but as the FTC complaint establishes, many types of calls are covered.

  • Outbound calls initiated by telemarketers are subject to the TSR. No matter why a telemarketer places a call – whether in response to a consumer’s online inquiry, a consumer’s request for a callback, or for any other reason – the TSR requires telemarketers to tell the truth. CarShield called consumers who filled out online quote requests. It also made follow-up calls to consumers who declined to buy a vehicle service contract during an earlier call. Some of those consumers may have even asked to be called back, but because the calls were initiated by CarShield, they were subject to the TSR’s prohibitions against deception.
  • Some inbound calls initiated by consumers are also covered. The TSR exempts calls by consumers in response to direct mail ads that are addressed to particular recipients only if the ads clearly disclose – among other things – all material restrictions, limitations, or conditions. Because CarShield’s direct mail ads were addressed to specific consumers, but lacked the required disclosures, inbound calls made by consumers who received those ads were covered by the TSR.
  • Upselling, including many common retention techniques, is covered by the TSR. When consumers called CarShield to cancel, a retention agent tried to persuade them to keep their contracts by sweetening the deal with discounts. This form of upselling falls within the TSR, whether it takes place during an inbound or an outbound call.

If your business makes or receives these types of calls, familiarize yourself with the Telemarketing Sales Rule, especially its prohibitions against deceptive conduct. These prohibitions are separate from the Do Not Call provisions and apply even when the call itself is permitted by the TSR. Businesses that violate the Rule can face hefty civil penalties, so compliance is cost-effective. Consult FTC resources on the Telemarketing page

 

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chester dinwid…
July 31, 2024

Been trying to get car shield and American auto shield to cover a timing chain that caused a engine failure for over 2 months now its all lies.

Stacy
August 05, 2024

In reply to by chester dinwid…

As consumers with Car Shield plans who have been yanked around by this company do we get any compensation from this settlement? We are the impacted parties, the government was not hurt.

FTC Staff
August 05, 2024

In reply to by Stacy

The proposed order imposes a $10 million monetary judgment against CarShield and AAS, which will be used to provide refunds to defrauded consumers.

Robert P Edwards
August 28, 2024

In reply to by Maria Zamora

When I need it a jump. I was told that I they could not find me in their database. Therefore I had to pay for the jump on my own. I have yet to be reimbursed for this.

Emmanuel Arthur
September 10, 2024

In reply to by Maria Zamora

I have signed up for car shield earlier this year and I waited for my 30 days to be up and I had a claim to report and I couldn’t get the agent to speak to me. What shall I do now?

Joan Gardner
August 14, 2024

In reply to by Sisco Lewis

I had a car in the shop for a total of (4) months that needed a transmission. I was told it was covered however the transmission cost me in excess of $5000. and Carshield paid only $900. Shield told the dealership that it would not pay for the recommended transmission but instead a used part.

Rick Dellacorino
August 22, 2024

In reply to by Sisco Lewis

Hi,

I want to file a claim against car shield for deceptive selling practices. I been paying $90.00 a month and never used it.

Denise Mitchell
August 28, 2024

In reply to by Sisco Lewis

They had me take vehicle to a pepboys facility when I was at a ford deal
ership (ford edge). They kept my vehicle well over 2 months
to no avail. Paid them 200 plus dollars. Had it removed approx 45 miles to ford using tow truck but there was a ford company only 2minutes away but don't deal with carshield. Had to get a new transmission which took about another (apprx 3 more weeks) After all said and done they offered a used transmission with same miles as my car(not new ). I opt to ho with dealer who recommended a new one so I wouldn't have same problem. Paid out around 1000

Leroy Frizzell
August 15, 2024

In reply to by Bonnie DeNucci

Had Car Shield for three years and trying to claim three incidents of parts failures and Car Shield refused two of the three and only covered $100 on third claim. Power steering pump and blown front wheel bearing on I-75 rejected. I paid over $2,500 for the repairs. How do I hold them accountable for their falsehoods?

Edward Terrell
August 13, 2024

In reply to by Christopher Toulon

I had car shield and they did nothing.They say they would do when it came time to fix my car

Paul Mcduffie
August 12, 2024

In reply to by FTC Staff

How get do you go about refunded for payments to car shield because had it for about two years , and recently tried to use my plan service for a repair was given an excuse on the service, and charge an outrageous price for repair.

Jack honeycutt
August 13, 2024

In reply to by FTC Staff

I toke my dodge ram in to the dealership they put a gas pump in I had to pay over 800 dollars .my plan said all I need to pay was 100 dollar. Then I had to take it in again to the dealership to have the main fuse box replaced had to pay 2500 dollar. What happened to the 100 dollars deub.

Rhonda Taylor
September 27, 2024

In reply to by FTC Staff

How do you apply for a refund? We called and they told us we had to file a claim to get the money back we paid.

Lloyd south
September 19, 2024

In reply to by FTC Staff

My engine locked up on my 2018 Hyundai and I took it to the dealer. Car Shield only offered to pay a small portion of the repair bill which I refused . They then made several phone calls to me trying to pressure me to accept which I refused.

Bridget Tabb
September 28, 2024

In reply to by FTC Staff

How do we join in the lawsuit I paid on 2 cars for 1 year for them not to COVER ANYTHING! They wouldn’t cover my engine repair I paid out of pocket while having carsheild.

Margaret Hearn
August 08, 2024

In reply to by Stacy

When my husband died in 2020, I thought I might need some extra help with my truck. I took Car Shield.
When I had a problem with the air conditioner, I took it to Ford and called Car Shield they said I had to take my truck to a particular mechanic. So, I did and no luck. They did not pay. They lie all the time.

Sylvia verdett…
September 11, 2024

In reply to by Stacy

Been on my car shield for two years not happy I should get back my money started on platinum got charged to gold

Sateria Friend…
August 05, 2024

In reply to by chester dinwid…

I have had car shield for the last 4 years now. And I have been going back and forth with carshield and my service department for my 2016 Cadillac Escalade for the last 3 months. I have been without a vehicle for the last 3 months because car shield keeps sending the service department through hoops about replacing my engine. I have two policies with carshield and aluminum policy and a powertrain policy. They do not want to replace my engine but wants to constantly ask for pictures and videos and calls a failure when they've had the cause of failure more than four times. This is just sad. I'm in North Carolina and I tried to find a lawyer that would help me get my truck fixed through car shield and it seems like no one wants to go up against car shield. It's sad that I'm having to deal with this all by myself. I truly would also love to hold the celebrities at fault for this as well for endorsing a company that clearly doesn't respect their clients. Total disrespect for all of us that's paying all this money because they said they could help in times of need. Will my vehicle has been gone 3 months now and I have no way of getting my 5-year-old to school come August 12th.

Kelli Minix
August 05, 2024

In reply to by chester dinwid…

We are literaly going through the same thing with a customer of ours right now. We are the repair facility and i have gone back and forth with these guys for a month now. The last guy was so rude he hung up on us after refusing to let us speak to a supervisor. His name was Dewayne in the powertrain dept. What a joke of an aftermarket warranty company!

Sheila Robinson
August 07, 2024

In reply to by Kelli Minix

Car shield dragging their feet, my car been in the shop for almost a month and they keep saying that they haven’t heard from the mechanic, but the mechanic said they have got in touch with them and sent them everything they need but my car is still not being worked on. Midas is not the fault it is car shield they are still waiting on them for approval to replace my engine I have been missing work because of this .

Vickie
August 19, 2024

In reply to by Kelli Minix

I was also a customer of Carshield back in July 2024, I took my car to the Chevrolet service center and then Pep Boys after they refused to pay for the repairs from Chevy, BOTH repair shops complained about Carshield giving them the run around.

Sheila Robinson
August 26, 2024

In reply to by Kelli Minix

Yes my car has been in the shop for over a month now they kept going back and forth asking for the mechanic to break down different parts of the engine in the end they denied my claim. Because they say too much carbon build up SMH

Juanita Owens
August 23, 2024

In reply to by chester dinwid…

Been with car sheld 5 years and paying $109 a month and they would even have my windows fixed

Gary griwatz
August 05, 2024

Very very misleading they never cover everything take it to your dealer we cover that and then it's reviewed and they don't cover that. Especially when you take it to a dealership they have say they do not cover dealer costs I should have taken to a private garage. Please add me to the lawsuit I am very unhappy then they continue to call you about opening up new policies about your home and buildings. Deceptive misleading and the underwriter calls you back saying most of the items are not covered even though the agent said it was . Please add my name as a plaintiff.

Mrs. Watson
August 05, 2024

I’m so very happy someone went after them, this company is horrible. And they honestly don’t care how they treat customers. They always want the vehicle torn down until the point of failure. Just to tell you that they won’t cover the cost of the repair! Just horrible

Rland
August 05, 2024

I never fell for their crazy ads. And threw away their continual letters Glad I did

Jo-Ann
August 05, 2024

My husband got ripped off by Car Shield. Any chance he can get a refund of the premiums that he paid for 7 months?

Mary Howard
August 05, 2024

I was told when I applied for this service that my deductible would only be $100 and when I needed the service lately, I ended up paying over $300.00. I would like to know where we sign up for the claim.

Pat Nelson
August 05, 2024

I need a attorney that is working on these since I had Car shield and American auto shield

Richard Falk
August 05, 2024

i needed them just once for the replacement of my intake manifold on my 2016 f-150, i had no issues what-so-ever. when i got my contract. i noticed ot was broken down into the three contractual arena's. they covered everything I needed. I'll continue to use Carsheild.
i also tried to get a contract for my wife's 2020 Buick Enclave, they didn't want anything to do with that car. What gives?

Walter C Rivers
August 05, 2024

I have had the same problem and issues with a company called "Endurance". They tell the same lies and constantly denied claims that I ended up fixing myself. Luckily, I had a good mechanic that worked with me as far as the payments were concerned for the repairs. He then told me to cancel the auto coverage and never buy another one again. Some don't pay the bills, others just straight up lie, and most deny a so called "covered repair". I had 2 different issues and both were denied, my transmission and the ac condenser. Thieves and scammers!

Carol Stokes
August 05, 2024

My motor and water pump went up suddenly and American autoshield refused to cover the cost. I got excuses after excuses and had to pay $5500 out of pocket to get my car fixed

John Trowbridge
August 05, 2024

Do the people who have been duped and misled by Car Shield receive any compensation from the lawsuit? Especially those of us that are still under contract and have lost thousands to Car Shield?

FTC Staff
August 05, 2024

In reply to by John Trowbridge

The proposed order imposes a $10 million monetary judgment against CarShield and AAS, which will be used to provide refunds to defrauded consumers.

murphy edwards
August 06, 2024

In reply to by FTC Staff

I took my 2012 chevy silverado truck to billy navarre dealership in lake charles la for a/c repair,i notified carsheild before taking vehicile in for repairs, the dealership checked it and notified carsheild representive who inspected the vehecile for the repairs that was needed for the a/c and they said they were not responsible for any of the repaires, the amount i had to pay was 2,700 dollars.

Carol Stokes
August 07, 2024

In reply to by FTC Staff

How do we file to get a refund of for paying out of pocket to get our cars fixed and money we paid out for the warranty. I had over $5000 that I did not have to get my motor fixed

James stone
August 05, 2024

What states are sueing car shield

Tressa
August 06, 2024

I went through the same thing! No one accepts them and the shops that do over charge what car shield is willing to pay. Shops will not use their parts due to warranty restrictions and opt out for the OEM and you have to the difference.

David Valio
August 08, 2024

I knew all these Car Shield companies were SCAMMING the public. What took the FTC so long to figure it out?

Zulaikah Sulaiman
August 08, 2024

I had car shield and my transmission went out and they wouldn't pay for the repair leaving me to pay over 5,000 to get a new one put in. How do I get included in this money so I can payed back somewhat for what I was out the months I was paying them and for the transmission they didn't pay for?

Carol Stokes
August 08, 2024

May this year my son and i were driving my 2017 Ford Fusion and got 5 mins from my house and thee temperature light came on and the car started slowing down then shut off. We managed to get car out of road and had the car towed to the mechanic to find out that the water pump and motor had went up. The auto shop put in a claim with AAS and was told my car could not be covered cause it had a salvage titled. I sent in my title and letter from the insurance company proving up true. Then I was told that it was not covered because of the codes. I called AAS and was told by John Id 7083 that the motor was burnt up like it was in a fire and that why it was not covered. I asked for a full refund because this was the second time I tried to get coverage on my vehicle and was denied. I was told I was only eligible for a particle. I asked for address to corporate office and John got rude and nasty. I then received a text that if I didn't keep the warranty after refusing to keep paying for it I would lose my while payment. What the point off paying for something that I cant even use. Just excuse after excuse. I want to know how to get included in the lawsuit

Linda Miller
August 08, 2024

Over time I paid car shield $5000. When I needed their help they wasn't there for me. At first they said yes, next day I was told no. I was so frustrated; it was then that I stopped paying. I would love to get at least some of my money back. The article doesn't tell you how.

Alicia Hessenflow
August 08, 2024

I have Car Shield where I pay $140/month through the perks of my job. I had to use it recently - I had an issue with our 2015 Kia Sportage on June 11, 2024. Our check engine light came on & took it to a local O'Reilly to see what the code was. After we got there we started hearing some knocking from the front of the car. When the tech at O'Reilly informed us that there was an issue with our car where need to have it towed to a Auto Mechanic shop. So I called Car Shield to have our car towed since we couldn't drive it. So we finally got a tow to the recommended mechanic shop as well. I had to pay an extra $52 to have car towed to the shop as well. After we got the car to the shop with car it took me the rest of the day to get a rental car while our car was there at shop to see what is going with it.

I finally got a rental car the next day after 7:30 am after I had an issue getting the car as well since I had to get a deposit for the car also. Plus they informed me that I can only for 14 days. I wasn't happy to hear that due we didn't know what was wrong with our car.

While the car was the mechanic shop, the adjuster finally showed up at shop to look at the shop to look at the car & informed them that they want the last 12 months of maintenance on the car. So I sent them to Car Shield like they asked me to, so I did. But within 2 days later I had to send it to the mechanic shop as well.

After the car was there over a week & half they informed me through the mechanic shop that I needed to have it towed to a Kia dealership since there was an engine issue. They wouldn't let the mechanic shop deal with it since it could be covered by Kia. But I had to have it towed from them to Kia dealership out in Independence, MO for the work to be done. Meanwhile I had to pay for the car rental because they didn't want pay anymore since our car was taken out to Independence. So finally, Kia paid for the tow & for the rental car also. I finally after a month we got our car back on July 19th. I really wouldn't recommend Car Shield at all since I lost out on doctor appointment on June 11th, pay for a tow, pay for the car at the mechanic shop & pay for the rental car as well. This all happened when I have been off from work when I got injured & limited income as well.

Tami Ray
August 07, 2024

I have been trying to get them to pay for a new motor for the last 3 months, they made me run to all the places that I had oil changes at and I gave them about 20 receipts they wanted to see how often I went and my motor was recalled over a year ago there's proof of that and now because I did not give them all the oil change receipts I missed a few they're wanting the car people to tear it down and even then when they do and they decide they're not paying for it I have to pay for the new motor plus whatever it cost in labor, this is just wrong... Oh and they also tell me I get roadside assistance No I have to pay for that as well...

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