Most drivers don’t expect to hear from the federal government—unless something has gone very wrong.

But this month, more than 168,000 Americans opened their mailboxes to find checks from the Federal Trade Commission, all tied to a case that exposed widespread deception in the vehicle service contract industry.

The fallout is substantial: more than $9.6 million headed back to consumers who were misled, frustrated, and often left paying for repairs they thought were covered by CarShield and American Auto Shield.

This is one of the largest automotive-related refund efforts of the year, and it raises bigger questions about how these companies operate, what consumers should watch for, and whether the settlement goes far enough.

As someone who has spent years investigating automotive scams and advocating for transparency in the industry, I can tell you this case reveals a deeper problem that too many drivers face: service contract companies relying on aggressive marketing, overpromised coverage, and fine print that only benefits the company.

In July 2024, CarShield and American Auto Shield (AAS)—one of the most recognizable pairs in the extended warranty business—agreed to pay nearly $10 million to settle an FTC complaint. The allegations centered on misleading advertising, deceptive telemarketing, and claims that simply didn’t match what consumers received.

Many drivers believed they were signing up for protection that covered major repairs, sometimes paying as much as $120 a month. Yet when they needed help, they discovered that the “coverage” often vanished behind exclusions, denials, and carefully crafted contract language.

According to the FTC, the companies advertised that virtually all repairs, or even all repairs to “covered” systems, would be paid under their plans. Drivers were told they would receive rental cars at no cost when their vehicles broke down and could take their car to any repair shop.

But many found themselves stuck with bills they assumed they would avoid. The agency argued that these misleading claims convinced countless consumers to buy service contracts that didn’t live up to their promises.

Under the settlement, CarShield and American Auto Shield must stop using deceptive claims in their marketing, and they are now required to ensure all endorsements and testimonials reflect accurate, verifiable customer experiences.

This is notable because endorsements have been central to their advertising strategy. The new rules force these companies to match their marketing with their actual service—and for many consumers, that alignment is long overdue.

The FTC’s payout is already underway. Checks have been mailed to 168,179 drivers impacted by the false promises and denied coverage. Each check must be cashed within 90 days, and there is no requirement to provide banking information or make payments to receive the refund. For anyone with questions, the FTC has directed recipients to contact the refund administrator or visit the agency’s website for additional information.

This refund effort is part of a broader push by the FTC to hold companies accountable, especially those operating in industries where consumers often feel overwhelmed or confused.

In 2024 alone, FTC actions resulted in more than $339 million in refunds across the country. Automotive issues remain a significant area of concern because drivers rely heavily on their vehicles, and unexpected repair costs can easily create financial strain.

This case serves as a reminder that vehicle service contracts—often marketed as “extended warranties”—can be useful when offered by reputable companies that clearly outline what is and is not covered.

Too often, consumers are sold plans that promise peace of mind while delivering little more than high monthly payments and denied claims. Many drivers purchase these plans believing they will safeguard them from costly repairs, only to learn that exclusions and loopholes overshadow the benefits.

The FTC’s action may be a turning point, signaling that regulators are paying close attention to misleading automotive advertising. Whether this will force broader industry changes remains to be seen. But it is clear that companies using aggressive sales tactics, unclear language, and unrealistic claims are facing new scrutiny.

Drivers deserve straightforward information, honest coverage, and companies that honor the commitments they advertise. This case underscores why transparency matters and why consumers must stay vigilant when evaluating any service contract.

The CarShield settlement is a significant step, but it is also a reminder that if something sounds too good to be true, it usually is.

As the checks continue to arrive and the industry takes notice, one message is clear: oversight is increasing, and companies promising high-value automotive protection will be expected to deliver exactly that.

For drivers nationwide, this is a win—and a moment to rethink how we protect our vehicles and our wallets.

My bottom line, with a big print gives, the small print takes away. Make sure to read the contract carefully and most of these deals are not good ones.

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Lauren Fix is an automotive expert and journalist covering industry trends, policy changes, and their impact on drivers nationwide. Follow her on X @LaurenFix for the latest car news and insights.