Drivers to Get Millions Back After FTC Finds Service-Contract Ads Misled Customers

Refunds are on the way after the FTC found deceptive sales

The Federal Trade Commission is sending more than $9.6 million back to people who bought vehicle service contracts from two companies, CarShield and American Auto Shield, LLC. The refunds follow an FTC enforcement action that concluded the firms misled customers about what their contracts would cover and how claims would be handled. For the drivers affected, this is real money returning into bank accounts and mailboxes — not a vague promise.

Who will get checks, how the money will be paid, and the expected timetable

People who bought service contracts from CarShield and American Auto Shield and whose claims or coverage were affected are the ones eligible for payments. The FTC is working with a claims administrator to identify eligible buyers from sales records and to notify them by mail or email. The agency says the payments are part of a court-ordered remedy tied to its action against the two firms.

If you are eligible, expect a notice explaining the size of your refund and how it will be paid. The administrator typically sends checks or makes electronic payments. Some consumers may be asked to fill out a simple claim form or provide confirmation of purchase before a payment is finalized.

Timing will vary. Notices and payments often roll out over weeks to a few months as records are verified and forms are processed. If you think you qualify but you do not receive a notice in that window, keep an eye out for follow-up mailings from the FTC or the named claims administrator and watch statements from your card issuer or bank for incoming payments.

What the FTC found and the legal basis for the refunds

The FTC’s review concluded the companies made deceptive or misleading statements about their vehicle service contracts. In plain terms, customers were told they would get certain repairs or coverage, but the contracts or the companies’ handling of claims did not match those promises.

Regulators said the firms’ marketing created an impression that buyers would avoid major repair bills, when in many cases coverage was limited, exclusions were buried in fine print, or claim handling fell short of what customers were led to expect. Under U.S. law, the FTC can require refunds when a company’s advertising and sales practices are found to be unfair or deceptive.

The refunds come as part of a settlement or judgment that resolves the FTC’s claims and orders the companies to compensate harmed consumers. That remedy is meant both to make people whole and to deter similar behavior by other sellers in the market.

How the companies have responded and what it means for their businesses

Both CarShield and American Auto Shield agreed to the FTC’s order requiring refunds. Each company issued brief public statements saying they will cooperate with the claims process and resolve customers’ concerns. Those statements stop short of admitting wrongdoing but do commit to complying with the legal remedy.

For the companies, the immediate cost is the money being returned and any administrative expense tied to the claims process. There is also a reputational hit: consumers who felt misled are likely to avoid the brands in future and to warn others. Regulators and some state attorneys general may also pay closer attention to similar sellers in the future, which could raise compliance costs or push some firms to change how they market and sell contracts.

Steps affected consumers should take now

If you think you bought a contract from CarShield or American Auto Shield, look for mail or email from the FTC or an identified claims administrator. Read any notice carefully — it will tell you if you need to submit a claim form and what proofs of purchase are acceptable. Keep copies of your contract, receipts, and any claim correspondence you filed with the company.

Do not pay for any service to process your refund. Legitimate claims administrators work directly with the FTC and do not charge consumers to receive court-ordered payments. If you do not receive a notice and believe you are eligible, save documentation of the purchase and any interactions with the company in case you need to show proof later.

Why this enforcement matters for the vehicle service contract market

The action sends a clear signal that regulators are watching the way vehicle service contracts are sold. Many consumers buy these contracts to avoid big repair bills, and when marketing overpromises or hides limits in dense paperwork, it hurts people and undermines trust in the whole market.

We should expect clearer disclosures and tighter scrutiny going forward. Companies that sell service contracts may have to spell out limits, exclusions, and claims procedures much more plainly. That could benefit shoppers by making it easier to compare offers and to understand what they are buying — and it should reduce the number of buyers who learn, the hard way, that the contract did not deliver the protection they expected.

Sources

• ftc.gov