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Volkswagen agrees to settle on charges it mislead consumers about their ‘Clean Diesel’ technology
June 30, 2016
AUGUSTA – Attorney General Janet T. Mills today announced a settlement requiring Volkswagen to pay more than $570 million to states for violating state laws prohibiting unfair or deceptive trade practices by marketing, selling and leasing diesel vehicles equipped with illegal and undisclosed defeat device software. The settlement also establishes an environmental mitigation fund of $2.7 billion. This agreement is part of a series of state and federal settlements that will provide cash payments to affected consumers, require Volkswagen to buy back or modify certain VW and Audi 2.0-liter diesel vehicles, and prohibit Volkswagen from engaging in future unfair or deceptive acts and practices in its dealings with consumers and regulators.
These coordinated settlements resolve consumer protection claims raised by a multistate coalition of State Attorneys General joined by 43 states and jurisdictions against Volkswagen AG, Audi AG, and Volkswagen Group of America, Inc., Porsche AG and Porsche Cars, North America, Inc. – collectively referred to as Volkswagen. They also resolve actions against Volkswagen brought by the United States Environmental Protection Agency (EPA) and Department of Justice (DOJ), the Federal Trade Commission (FTC), California and car owners in private class action suits.
“Volkswagen groomed an image to lead customers to believe they were making a purchase that was environmentally sound,” said Attorney General Mills. “It turns out their ‘clean diesel’ technology was anything but. Maine consumers were particularly impressed with this marketing, as demonstrated by data showing Maine had among the highest per capita VW ownership in the country. These settlements show that we will not tolerate this kind of manipulation in the market place.”
The investigation of the attorneys general confirmed that Volkswagen sold more than 570,000 2.0- and 3.0-liter diesel vehicles in the United States equipped with “defeat device” software intended to circumvent applicable emissions standards for certain air pollutants, and actively concealed the existence of the defeat device from regulators and the public. There were 3,982 affected vehicles sold in Maine. Volkswagen made false statements to consumers in their marketing and advertising, misrepresenting the cars as environmentally friendly or “green” and that the cars were compliant with federal and state emissions standards, when, in fact, Volkswagen knew the vehicles emitted harmful oxides of nitrogen (NOx) at rates many times higher than the law permitted.
Under the settlements, Volkswagen is required to implement a restitution and recall program for more than 475,000 owners and lessees of 2.0-liter diesel vehicles, of the model year 2009 through 2015 listed in the chart below at a maximum cost of just over $10 billion. This includes 3,982 vehicles in Maine.
Once the consumer program is approved by the court, affected Volkswagen owners will receive restitution payment of at least $5,100 and a choice between:
• A buy back of the vehicle (based on pre-scandal NADA value); or • A modification to reduce NOx emissions provided that Volkswagen can develop a modification acceptable to regulators. Owners will still be eligible to choose a buyback in the event regulators do not approve a fix. Owners who choose the modification option would also receive an Extended Emission Warranty; and a Lemon Law-type remedy to protect against the possibility that the modification causes subsequent problems.
The consumer program also provides benefits and restitution for lessees (restitution and a no-penalty lease termination option) and sellers after September 18, 2015 when the emissions-cheating scandal was disclosed (50 percent of the restitution available to owners). Additional components of today’s settlements include:
• Environmental Mitigation Fund: Volkswagen will pay $2.7 billion into a trust to support environmental programs throughout the country to reduce emissions of NOx. This fund, also subject to court approval, is intended to mitigate the total, lifetime excess NOx emissions from the 2.0-liter diesel vehicles identified below. Under the terms of the mitigation trust, Maine is eligible to receive approximately $20 million to fund mitigation projects to be determined by the Maine Department of Environmental Protection.
• Additional Payment to the States: In addition to consumer restitution, Volkswagen will pay to the states more than $1,000 per car for repeated violations of state consumer protection laws, amounting to $570 million nationwide. This amount includes $3,651,270 for affected vehicles Volkswagen sold and leased in Maine.
• Zero Emission Vehicles: Volkswagen has committed to investing $2 billion over the next 10 years for the development of non-polluting cars, or Zero Emission Vehicles (ZEV), and supporting infrastructure.
• Preservation of Environmental Claims: Today’s settlement by state attorneys general preserves all claims under state environmental laws, and Maine maintains the right to seek additional penalties from Volkswagen for its violations of environmental and emissions laws and regulations.
Volkswagen will also pay $20 million to the National Association of Attorneys General to establish a fund that state attorneys general can utilize for future training and initiatives, including investigations concerning emissions violations, automobile compliance, and consumer protection.
The full details of the consumer program will be available online at VWCourtSettlement.com and www.ftc.gov/VWSettlement.