— A CarShield class action lawsuit is on hold after a federal judge granted CarShield's motion to compel arbitration.
CarShield (NRRM, LLC) markets and sells third-party vehicle service contracts separate from warranties from automakers.
According to CarShield, the company is “America’s #1 Auto Protection Company,” but the class action lawsuit alleges it's all smoke and mirrors.
Three vehicle owners complain they were harmed by American Auto Shield's and CarShield’s failure to honor their vehicle service contracts. American Auto Shield is described by the lawsuit as the company that “develops and administers” the CarShield vehicle service contacts.
Many consumers have been exposed to CarShield vehicle service contacts through advertisements where celebrities endorsed the contracts. However, the Federal Trade Commission found issues with the endorsements and determined many celebrities promoting CarShield had never used any of the vehicle service contracts.
In 2024, the FTC, CarShield and American Auto Shield settled a $10 million lawsuit that accused CarShield of using false advertisements and deceptive reviews to sell their vehicle service contracts.
To learn about the allegations against CarShield in this class action lawsuit we recommend reading what the vehicle owners claim in their lawsuit.
CarShield Lawsuit — Plaintiffs Sent to Arbitration
In its motion to compel arbitration, CarShield argued this class action lawsuit shouldn't exist because the three plaintiffs agreed to arbitrate their claims.
North Carolina plaintiff April Lindsey-Evans and Illinois plaintiffs Brenna Sebek and Kevin Sheehan purchased CarShield vehicle service contacts over the phone and gave authorization for agents of CarShield to sign the contracts for them.
Those contacts contain class action lawsuit and jury trial waivers, and buyers are allowed to cancel the contracts within one month for a complete refund.
The plaintiffs argue against the authenticity of the service contract arbitration agreements, but CarShield submitted to the court all the contract paperwork, transcripts of sales calls and other evidence of authenticity.
Judge Zachary M. Bluestone wasn't happy with the plaintiffs and told them, "these authenticity issues could have been avoided if Plaintiffs had simply attached the VSCs [vehicle service contacts] to their Complaint, which they failed to do despite apparently having copies that allowed them to include verbatim excerpts."
According to the judge, a party seeking to compel arbitration has the burden to prove a valid agreement to arbitrate exists. But if a valid agreement exists, “the party resisting arbitration bears the burden of showing [] that the arbitration provision is invalid.”
The plaintiffs complain they cannot be held to arbitrate their claims because the agreements "were an improper, after-the-fact modification of the oral agreements." Additionally, the plaintiffs allege the "arbitration clauses are unconscionable and thus unenforceable."
But according to Judge Bluestone:
"Plaintiffs are incorrect on both fronts—the arbitration agreements are valid and enforceable."
The CarShield lawsuit was filed in the U.S. District Court for the Eastern District of Missouri: April Lindsey-Evans, et al., v. NRRM, LLC d/b/a CarShield, LLC, American Auto Shield, LLC, et al.
The plaintiffs are represented by Peiffer Wolf Carr Kane Conway & Wise, LLP, and Sauder Schelkopf LLC.