CarShield to pay $10 million fine to feds for 'deceptive advertising'

The Federal Trade Commission said it has reached a settlement with CarShield after the company was accused of using "deceptive and misleading" advertising to sell vehicle service contracts.

The Federal Trade Commission said that purchasers of vehicle service contracts were led to believe that certain repairs would be covered, only to find out they wouldn't be. Officials said celebrity and consumer endorsers made false statements in its ads. Sports commentator Chris Berman and actor Ice-T were among the celebrity endorsers noted in the Federal Trade Commission's report.

“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. Instead of delivering the ‘peace of mind’ promised by its advertisements, CarShield left many consumers with a financial headache,” said Samuel Levine, director of the 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.”

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Additionally, the FTC said that many of CarShield's celebrity endorsers claimed to be customers of the company, but in reality, were not real customers.

Consumers used in ads also misled viewers on how much money they saved using the service, the FTC alleges.

According to CarShield's website, the company offers various plans that cover the cost of car repairs if various mechanical parts need repairs.

CarShield has an A+ rating by the Better Business Bureau, but it only has a 1.6 out of 5 rating among customers.

Scripps News has contacted CarShield for its reaction.