Vehicle service contract company CarShield has agreed to pay $10 million in a settlement with federal regulators over deceptive and misleading marketing practices allegations.
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On Wednesday, the Federal Trade Commission announced that the company used celebrity endorsements to attract customers with promises of protection from expensive vehicle repairs. The charges extend to American Auto Shield LLC, the administrator of CarShield’s service contracts. “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, NBC News reported.
Customers who used the company’s subscription service learned that most of their repairs were not covered despite paying up to $120 monthly. In response to the settlement, CarShield said in a statement that they disagreed with the FTC’s claims and vowed to ensure that customers fully understood their services and the value they offer. Additionally, they have updated their marketing strategy to include more detailed information about the type of car repairs typically covered and have full plans easily viewable before purchase.
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The company currently has an A+ rating from the Better Business Bureau but has more complaints on the website and a customer rating of 1.6 out of 5.
One customer wrote, “I have been paying $99.99 for along time 2 or 3 years when my vehicle tore up when I called them. I was told then that the plan I had wouldn’t pay. They never told me that the whole time I was paying.”
Another wrote, “I was very optimistic about the warranty I was purchasing! The sales guy was great! Made it seem flawless! No need to worry if anything happens we have you covered. Made the whole process seem so easy! The rear end went out in my jeep about a month ago. Parts covered no issues, the warranty company did not want to pay for the labor. Stated that they would pay 4 hours of labor on a 9 hour job. Which left me owing over $1,000 in labor! No matter what labor guide they are looking at there is now way they are that far off.”
American Auto Shield did not release a statement that had a similar rating.
The post CarShield to Pay $10 Million for Misleading Auto Warranty Ads appeared first on Hollywood Unlocked .
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