Volkswagen Required to Repurchase or Fix Falsely-Marketed Diesel Vehicles, Provide Restitution and Address Environmental Harms; Attorneys General Nationwide Obtain More Than $570 Million in Civil Penalties
Attorney General Doug Chin and Office of Consumer Protection (“OCP”) Executive Director Stephen Levins today announced a settlement requiring Volkswagen to pay more than $570 million 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.
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 Volkswagen and Audi 2.0-liter diesel vehicles, and prohibit Volkswagen from engaging in future unfair or deceptive acts and practices in connection with its dealings with consumers and regulators.
Attorney General Chin said “This settlement punishes Volkswagen for deceiving Hawaii consumers. It affects the owners of more than 900 vehicles owned or leased in Hawaii. In addition to consumer restitution, it provides up to $10 million in payments to Hawaii.”
Today’s coordinated settlements resolve consumer protection claims raised by a multistate coalition of State Attorneys General in 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), the Department of Justice (DOJ), the Federal Trade Commission (FTC), California and car owners in private class action suits.
OCP Executive Director Levins said “This settlement will provide excellent relief to the Hawaii consumers who were victimized by Volkswagen’s outrageous conduct.”
The attorneys generals’ investigation 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. 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 up to 911 vehicles in Hawaii. 820 affected vehicles in Hawaii are 2.0 liter engine models. The remaining vehicles are 3.0 liter engine models. This settlement specifically pertains to the 820 2.0 liter engines in Hawaii. Lawyers continue to negotiate about what relief will be available later to owners of the 3.0 liter engines.
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 National Automobile Dealers Association (“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, Hawaii is eligible to receive $7.5 million to fund mitigation projects.
- 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 $2.5 million paid for affected vehicles Volkswagen sold and leased in Hawaii.
- 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.
Volkswagen will also pay $20 million to the states for their costs in investigating this matter and 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.
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