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FTC sues Volkswagen over ‘deceptive’ diesel claims – USA TODAY
Posted: Tuesday, March 29, 2016
The Federal Trade Commission on Tuesday filed a four-count complaint against Volkswagen Group in a California federal court, accusing the company of deceptively advertising “clean diesel” vehicles.
The lawsuit compounds the German automaker’s troubles in the U.S., where it is already facing a criminal probe and numerous lawsuits after it admitted that it rigged more than half a million vehicles with software to cheat emissions regulations.
The FTC is seeking “permanent injunctive relief, rescission, restitution, the refund of monies paid, disgorgement of ill-gotten monies, and other equitable relief,” according to the lawsuit. Though FTC attorneys did not specify an amount, a person familiar with the case said the government is seeking more than $15 billion in damages.
“For years Volkswagen’s ads touted the company’s ‘Clean Diesel’ cars even though it now appears Volkswagen rigged the cars with devices designed to defeat emissions tests,” FTC Chairwoman Edith Ramirez said in a statement. “Our lawsuit seeks compensation for the consumers who bought affected cars based on Volkswagen’s deceptive and unfair practices.”
Volkswagen TV commercials, print advertisements, press releases, emails and online videos invariably promoted the company’s “clean diesel” slogan, claimed that VW diesels had low emissions and describing the cars as “environmentally-conscious,” “eco-conscious,” or “green,” according to the lawsuit.
“It was very emotionally appealing campaign,” Kelley Blue Book analyst Rebecca Lindland said in an interview. “You felt like you were a good human being, it made you feel better about buying a diesel and it also made you feel like you were buying the last technology.”
According to the lawsuit, VW marketers studied potential diesel customers and determined that they “rationalize themselves out of their aspirations and justify buying lesser cars under the guise of being responsible.”
The company has already set aside $7 billion to pay for repair costs on the approximately 11 million vehicles globally that are affected by the emissions scandal. But analysts expect tens of billions of fines and settlements before the episode is complete.
The lawsuit was filed in the U.S. District Court Northern District of California, which is also handling the consolidated litigation from consumers seeking economic damages over the emissions violations. That could expedite what attorneys describe as a global settlement involving the various claims against Volkswagen, which corporations often prefer over years of uncertain litigation.
“Volkswagen has received the complaint and continues to cooperate with all relevant U.S. regulators, including the Federal Trade Commission,” VW said Tuesday in a statement. “Our most important priority is to find a solution to the diesel emissions matter and earn back the trust of our customers and dealers as we build a better company.”
Volkswagen diesel cars on models ranging from 2009 through 2015 are emitting harmful pollutants — namely nitrogen oxide (NOx), which can exacerbate respiratory conditions such as asthma — at rates of up to 40 times U.S. standards.
In several instances, Volkswagen marketing materials claimed that its diesel vehicles reduced NOx emissions by up to 90%, according to the FTC.
Linda Goldstein, chair of law firm Manatt Phelps & Phillips’ advertising, marketing and media practice, said the FTC’s “threshold for proving deception is quite low” in cases like this. For example, VW could still be held liable even if the marketers who made the ads didn’t know that the vehicles violated federal standards.
“This was an FTC case waiting to happen because their based their entire advertising campaign on this benefit,” she said.
In one 2015 online video for VW’s “Diesel Old Wives’ Tale” series, an “old wife” holds a white scarf to the exhaust of a VW Golf SportWagen TDI and deems it pristine.
“See how clean it is?” the woman asks.
“Volkswagen TDI Clean Diesel: Like really clean diesel,” the ad’s tagline concluded, according to the FTC.
That video alone was viewed at least 9 million times.
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