By Jonathan Stempel
(Reuters) -CarShield agreed on Wednesday to pay $10 million to settle U.S. Federal Trade Commission charges of deceptive advertising for its vehicle service contracts, including ads featuring the actor Ice-T and other celebrities.
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.
CarShield's alleged deception included claims that consumers would never pay for repairs to "covered" parts such as engines and transmissions, would receive rental cars when their cars broke down, and could use repair shops of their choice.
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 (NYSE:HUD) 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.