FTC Fines CarShield $10 Million for Deceptive Ads

Ice Tea’s promise that “you’ll never pay for expensive car repairs again” doesn’t ring true says FTC.  

You’ve probably seen the commercials at least once.  Ice Tea and Vivica Fox or even Ernie Hudson touting the great benefits of CarShield and that “you’ll never pay for expensive car repairs again.”  

Well, those words weren’t exactly true.   It turns out  CarShild service contracts had tons of exceptions and exclusions and many people who signed up were paying for expensive car repairs again.  

According to the Federal Trade Commission individuals who called the number on the commercial reached a “specialist” who confirmed the ads promise and offered to sign the contract on their behalf.  But after you gave your OK, the FTC says customers got a thick document full of many, many exceptions and exclusions. 

Customers who tried to use the coverage discovered CarShield might require them to pay to find out what caused their breakdown, might fail to cover repairs, and might decline to give them a rental car until their claim was approved. 

 The FTC says CarShield customers also had trouble finding a mechanic willing to accept their CarShield contracts.

 After looking into a large number of complaints, the U.S. Federal Trade Commission charged Car Shield with deceptive advertising of its vehicle service contracts, including TV ads featuring Ice-T and other celebrities.  The company has agreed to pay $10 million as part of a settlement of the case.  

The settlement addresses alleged misrepresentations dating to 2019 over how much coverage consumers could expect under the contracts, which cost about $80 to $120 per month, and bans further misrepresentations by celebrity endorsers.

The FTC objected to CarShield’s assurance of “peace of mind,” and claims that “you won’t get stuck with another high repair bill” and “you’ll never pay for expensive car repairs again.”

It also said many celebrity endorsers who claimed they used CarShield’s service contracts had not done so.

“Instead of delivering the ‘peace of mind’ promised by its advertisements, CarShield left many consumers with a financial headache,” Samuel Levine, the FTC’s consumer protection chief, said in a statement.

The celebrity endorsers have also included sportscaster Chris Berman, Los Angeles Dodgers pitcher Walker Buehler, actors Vivica A. Fox and Ernie Hudson and TV host Adrienne Janic, as well as Ice-T. None was accused of wrongdoing.

CarShield did not admit or deny wrongdoing in agreeing to settle. The settlement also covers American Auto Shield, which administers its service contracts.

In a statement, CarShield General Counsel Michael Carter said the company disagreed with many FTC claims but was committed to helping consumers understand what they are paying for, including on its website.

He also said CarShield is “making very clear that all spokespeople in our ads are actual CarShield customers.”CarShield is also known as NRRM LLC and based in St. Peters, Missouri, a St. Louis suburb.Maintaining a car can be expensive. 

What to Look for in Car Service Contracts 

If you’re considering buying a car service contract, do some research and remember:

Never agree to a contract you haven’t looked at first. Look for exclusions that deny coverage or restrict where you can get your car serviced. Does the contract match the coverage the salesperson described to you? If not, walk away.        

You don’t need (or want) duplicate coverage. Check to see if your car is already covered by an existing warranty. You might already have the coverage you were looking to buy.

Don’t rely on celebrity endorsements alone. It’s helpful to look at reviews from a variety of sources, like trusted websites with impartial expert reviews. Also be on the lookout for fake reviews.