Volkswagen has agreed to spend up to $14.7 billion to settle charges of cheating on emissions tests and deceiving customers.
The company will offer consumers a buyback and lease termination for nearly 500,000 model year 2009-2015 2.0 liter diesel vehicles sold or leased in the United States. It will spend up to $10.03 billion to compensate consumers under the program.
In addition, Volkswagen will spend $4.7 billion to mitigate the pollution from these cars and invest in green vehicle technology.
The agreements were made in two settlements, one with the United States and the State of California and one with the U.S. Federal Trade Commission.
The settlements partially resolve charges by the U.S. Environmental Protection Agency, California Attorney General’s Office, and California Air Resources Board. The settlements also resolve claims by the FTC.
The settlements don’t resolve pending claims for civil penalties or any claims for 3.0 liter diesel vehicles. Nor do they address possible criminal liability.
The vehicles in the settlement include 2009 through 2015 Volkswagen TDI diesel models of Jettas, Passats, Golfs, and Beetles as well as the TDI Audi A3.
“By duping the regulators, Volkswagen turned nearly half a million American drivers into unwitting accomplices in an unprecedented assault on our environment,” said Deputy Attorney General Sally Q. Yates. “This partial settlement marks a significant first step towards holding Volkswagen accountable for what was a breach of its legal duties and a breach of the public’s trust. And while this announcement is an important step forward, let me be clear, it is by no means the last. We will continue to follow the facts wherever they go.”
Volkswagen allegedly equipped its 2.0 liter diesel vehicles with illegal software that detects when the car is being tested for compliance with EPA or California emissions standards and turns on full emissions controls only during that testing process, according to the lawsuit against Volkswagen filed by the Justice Department on behalf of EPA on January 4, 2016.
This resulted in harmful nitrous oxide levels up to 40 times the allowed levels during normal on-road driving conditions.
The FTC sued Volkswagen in March, charging that the company deceived consumers with the advertising campaign it used to promote its supposedly “clean diesel” VWs and Audis, which falsely claimed that the cars were low-emission, environmentally friendly, met emissions standards, and would maintain a high resale value.
“Nine months after news of Volkswagen’s emission scandal broke, we're glad to see a settlement that compensates consumers, cleans up the environment, and deters future wrongdoing,” said Mike Litt, consumer program advocate at U.S. PIRG Education Fund. “Today’s announcement is a good first step towards making consumers and the environment whole again.”
Litt said that although U.S. PIRG had called for buybacks at full purchase price, the inclusion of up to $10 billion for buybacks and additional compensation is a win for consumers.
Eligible consumers will receive notice from VW after the court enters the settlements this fall. Consumers will be able to see if they are eligible for compensation and if so, what options are available to them, at VWCourtSettlement.com and AudiCourtSettlement.com.
They’ll also be able to use these websites to make claims, sign up for appointments at their local Volkswagen or Audi dealers, and receive updates. Consumer payments won’t be available until the settlements take effect if and when approved by the court, which may be as early as October 2016.