Products Liability Law Daily $10B FTC settlement order for Volkswagen emissions approved
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Tuesday, October 25, 2016

$10B FTC settlement order for Volkswagen emissions approved

By Michael Menzhuber, J.D., LL.M.

A $10 billion settlement order against Volkswagen Group of America was signed by the federal district court in San Francisco, the Federal Trade Commission (FTC) announced today. The settlement will allow owners of certain Volkswagen and Audi 2.0 liter diesel cars to receive compensation for the vehicles they purchased, the agency explained in a news release (FTC v. Volkswagen Group of America, Inc., Dkt. No. 3:16-cv-01534, FTC File No. 162-3006). Today’s order resolves all of the FTC’s allegations related to Volkswagen’s 2.0-liter TDI "Clean Diesel" vehicles, except it reserves the FTC’s allegations regarding lessees of the automaker’s 2.0-liter TDI "Clean Diesel" vehicles whose leases terminated before September 18, 2015. The order also does not resolve the FTC’s allegations regarding Volkswagen’s 3.0-liter TDI "Clean Diesel" vehicles.

In March 2016, the FTC filed a complaint asserting that Volkswagen had misrepresented that certain Audi and Volkswagen vehicles were environmentally friendly, had low emissions, complied with state and federal emissions standards, and retained high resale values. The agency contended that more than a half million "Defeat Device Vehicles" (DDVs) were sold to U.S. consumers, based on Volkswagen’s representations that its "clean diesel" vehicles had higher resale values versus comparable gasoline vehicles. According to the FTC, the DDVs suffered a significant reduction in their resale value, compared with similar vehicles, because they contained defeat devices.

In settlement of the FTC’s complaint, the $10 billion order provides that, in most cases, the owners of Volkswagen and Audi diesel cars fitted with illegal emissions-defeat devices will receive between $12,500 and $44,000. The amount each owner receives will depend on the model, year, mileage, and trim of the car, as well as where the owner lives. The settlement also prohibits Volkswagen from: (1) making any misrepresentations that would deceive consumers about the environmental benefits, emissions standards, or the value of its vehicles or services and (2) marketing vehicles that contain "defeat devices." According to FTC Chairwoman Edith Ramirez, in her blog post "Road Cleared for VW to Compensate Consumers," the landmark settlement will enable a half million consumers across the country to sell back their tainted diesel-powered cars to Volkswagen.

The FTC also today issued a new consumer blog post, "VW Buybacks and Lease Terminations to Begin," which provides affected owners: (1) additional background information on the settlement order; (2) detailed instructions for affected owners regarding how and where to file a claim; (3) the claim-processing timetable; and (4) information on how and where they can pick up their buyback check, specifying that they do not have to use the check to buy a new Volkswagen.

Today’s order resolves all of the FTC’s allegations related to Volkswagen’s 2.0-liter TDI "Clean Diesel" vehicles, except it reserves the FTC’s allegations regarding lessees of the automaker’s 2.0-liter TDI "Clean Diesel" vehicles whose leases terminated before September 18, 2015. The order also does not resolve the FTC’s allegations regarding Volkswagen’s 3.0-liter TDI "Clean Diesel" vehicles.

Companies: Volkswagen Group of America, Inc.

MainStory: TopStory SettlementAgreementsNews MotorVehiclesNews MotorEquipmentNews CaliforniaNews

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