Drivers to get direct payment from $10m settlement if they used monthly service – company ‘used celebs to trick people’

THOUSANDS of drivers are likely eligible for repayment after a company reached a $10 million settlement agreement with the Federal Trade Commission, of FTC.

CarShield, a company that offered car owners service contracts and promised lower prices on maintenance fees, agreed to the payment.

Getty

Getty

The company didn’t admit wrongdoing in the settlement.

The FTC filed a complaint against the company, alleging its advertisements were “deceptive and misleading.”

CarShield employed famous personalities in television spots, like sports commentator Chris Berman and rapper Ice-T, promising “peace of mind” and “protection.”

The advertisements said costly repairs, like engine and transmission fixes, were “covered” by the monthly service.

“With CarShield’s administrators, they make sure you don’t get stuck with expensive car repair bills like this,” one ad said.

The advertisement ran 18,000 on television .

CarShield also used telemarketers to call customers who made web inquiries into the company.

Consumers purchased monthly plans with rates between $80 and $120.

But the FTC said drivers often didn’t receive financial help from repairs they thought were covered by the service.

Dozens of customers also complained that they couldn’t use as many repair shops as they hoped.

Others said they struggled to get a rental car at no additional cost.

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

“Worse still, CarShield used trusted personalities to deliver its empty promises.”

The company that operates CarShield, NRRM, LLC, agreed to the $10 million settlement, but still said it disagreed with the allegations.

“While we disagree with many of the assertions from the FTC, we share their commitment to helping customers fully understand exactly what we provide and the value we offer,” the company said in a statement.

What's a class-action settlement?

Class action lawsuits offer groups of people, or 'classes,' a way to band together in court.

These suits are often brought by one or a few people who allege a company or other entity has wronged a large group of people.

When a suit becomes a class action, it extends to all “class members,” or people who may have similar complaints to those who filed the suit.

Companies often settle class actions – offering payment to class members who typically waive their right to pursue further legal action by accepting money.

These payout agreements frequently include statements by the defendant denying wrongdoing. Companies tend to settle class actions to avoid the costs of further litigation.

Pollution, discrimination, or false advertising are a few examples of what can land a class action on a company’s doorstep.

“That’s why we were glad to work alongside the agency to answer their questions and carefully examine ways to improve our communications with customers.

The FTC said the $10 million payout is a “monetary judgment.”

It also said a portion of the funds “will be used to provide refunds to defrauded consumers.”

The FTC didn’t specify when customers will receive the refunds or how much they should expect.

But, the full amount of the settlement must be paid to the agency in the next seven days.