LAW-News-CarShield-0824

Using celebrity endorsers or humor has been an industry staple in automotive advertising for as long as any of us can remember. From local dealership ads to these top-tier Super Bowl commercials, people have always had a soft spot for a good (or so bad it’s good) ad.

And selling vehicles should be fun, but that doesn’t mean it’s not also serious business. From your advertisements to the F&I documents you use to close deals, the power you have comes with the responsibility of ensuring you’re being accurate with claims by every facet of your dealership and honest with your customers - and the Federal Trade Commission is always on the lookout for those not taking that responsibility seriously.

CarShield, a vehicle service contract seller, will pay $10 million to settle FTC charges that its advertisements and telemarketing were “deceptive and misleading.” The agency allegations mention not only CarShield, but also the celebrity endorsers used to make “false statements” in the advertisements.

“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, in a press release. “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.”

This case is just one of many targeting the automotive industry in recent years as the FTC heightens its focus on everything from deceptive advertising to holes in your F&I documents. It’s easy to get caught up in the day-to-day of things, but don’t forget to take a step back periodically and review your business from the top-down.

NRRM, LLC does business as CarShield, which markets vehicle service contracts administered by American Auto Shield, LLC. NRRM, CarShield, and American Auto Shield are mentioned in the FTC complaint.

Dealers can use FTC enforcement actions as an educational tool to help better understand the FTC’s focus and concerns about industry practices. FTC complaints are drafted solely from the agency’s perspective without explanations or defenses from the dealer.

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