Allstate Insurance Co. agreed to pay $600,000 to settle a consumer protection lawsuit alleging that its car insurance television ads failed to properly disclose that the “Accident Forgiveness” benefit featured prominently in the ads is not available in California, it was announced Wednesday.
The settlement was obtained by the San Diego County District Attorney’s Consumer Protection Unit working with the Riverside and Los Angeles District Attorneys’ Offices.
In June 2012, Northbrook, Illinois-based Allstate launched a nationwide television ad campaign for auto insurance focused on the consumer benefits of Allstate’s “Accident Forgiveness” program. Certain ads were prepared exclusively for the Spanish-speaking community, while the majority of the ads were targeted at a more general audience. Allstate officials estimate that this ad campaign reached 90 percent of the households in California.
Under Proposition 103, the California Department of Insurance prohibits the offering of programs of accident forgiveness in auto insurance policies in California.
However, the Allstate “Accident Forgiveness” advertisements failed to prominently disclose that the program is unavailable to California consumers as a matter of law.
The advertisements typically included a small disclaimer briefly visible at the bottom of the screen, but prosecutors alleged those disclaimers were insufficient to adequately alert viewers that the program is not available in California.
California law requires that all advertising must clearly and conspicuously disclose any material facts that viewers need to avoid being misled. Prosecutors alleged that the disclaimers in the Allstate “Accident Forgiveness” ads were unlawful under the advertising disclosure standards of California’s false advertising law and Unfair Competition Law, and that the ads convey an overall impression that California consumers would receive the benefit as part of Allstate’s car insurance.
Under the terms of the judgment — which will be entered without admission of liability — Allstate will be subject to an injunction requiring full compliance with California’s laws in its accident forgiveness advertising, including clear and conspicuous disclosure of the fact that such programs are not available in every state.
The stipulated final judgment was signed Tuesday by Riverside Superior Court Judge Daniel Ottolia.
—City News Service