Allstate To Pay $600K To Settle 'Accident Forgiveness' Lawsuit
LOS ANGELES (CBSLA.com) — Allstate Insurance Co. agreed Wednesday to pay $600,000 to settle a consumer protection lawsuit alleging that its TV commercials did not properly disclose that the "Accident Forgiveness" benefit featured prominently in its ads is not available in California.
The nationwide television ad campaign launched in June 2012, focusing on the consumer benefits of Allstate's "Accident Forgiveness" program. The commercials, some of which were aimed at the Spanish-speaking community, reached an estimated 90 percent of households in California, according to Allstate officials.
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.
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.
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