The Federal Trade Commission has distributed more than $9.6 million to people who bought vehicle service contracts from CarShield and had their repair claims denied — 168,179 checks in total.
The payments stem from a $10 million settlement CarShield and American Auto Shield, LLC reached with the FTC in July 2024 to resolve charges that the companies’ advertising and telemarketing were deceptive and misleading.
Eligible recipients paid CarShield for a vehicle service contract between September 2019 and September 2024 and had a claim denied.
What the FTC Alleged
The agency said CarShield’s advertisements deceptively represented that:
- All repairs — or all repairs to “covered” vehicle systems — would be paid for under the plans
- Consumers would receive a rental car at no cost when their vehicle broke down
- Consumers could use the repair facility of their choice
Buyers were paying up to $120 a month and then discovering that many repairs were not, in fact, covered.
The Celebrity Endorsement Problem
One element of the FTC’s case is worth separating out, because it shaped how the industry advertises.
CarShield’s celebrity endorsers stated that they had signed up for and used the company’s vehicle service contracts. In many cases, the FTC said, that was not true — the endorsers were not real customers and had never saved money using an American Auto Shield contract.
Endorsements presented as personal experience, when no such experience exists, are actionable in their own right. The case is now a standard reference point for how service contract marketing is scrutinised.
The Wider Enforcement Picture
CarShield is not an isolated action. The FTC has pursued the vehicle service contract sector repeatedly:
- American Vehicle Protection — the FTC sued the telemarketer for making illegal sales calls, pretending to represent car dealers and manufacturers, and making false claims about “bumper-to-bumper” warranties. AVP and related defendants were banned from selling extended auto warranties, and the agency has distributed 18,255 payments totalling more than $449,000 to affected buyers.
- Earlier actions have produced lifetime industry bans for operators of extended vehicle warranty telemarketing schemes.
What Consumers Should Take From It
“Bumper-to-bumper” is marketing, not a contract term. No vehicle service contract covers everything. Ask which structure you are being sold: powertrain, stated-component, or exclusionary. Only the last resembles a factory warranty.
Never buy from an inbound call. Legitimate administrators do not cold-call about your expiring warranty. The FTC’s cases in this sector are overwhelmingly against telemarketers.
Get the full contract before paying. Read the exclusions before the price.
Confirm the claim mechanics in writing: does the administrator pay the repair shop directly, can you use any ASE-certified facility, is the deductible per visit or per repair, and is there a cap on the labour rate they will pay?
If you believe you were misled, complaints can be filed with the FTC at ReportFraud.ftc.gov, with your state Attorney General, and with the Consumer Financial Protection Bureau.
Sources: FTC, “CarShield, Nationwide Seller of Vehicle Service Contracts, to Pay $10 Million to Resolve Federal Trade Commission Charges of Deceptive Advertising,” July 2024; FTC, “FTC Sends More Than $9.6 Million to Consumers Who Bought Deceptively Advertised Vehicle Service Contracts from CarShield and American Auto Shield, LLC,” December 2025; FTC, American Vehicle Protection Refunds.
For how to vet a contract yourself, see extended car warranty red flags.