Dieselgate just keeps on expanding. The Federal Trade Commission (FTC) today charged Volkswagen with deceptive advertising over its “clean diesel” vehicles. The four-count complaint was filed in the U.S. District Court Northern District of California, the same venue that is handling the consolidated actions of consumers seeking damages over emissions violations.
Today’s action adds a new layer of complexity to a multilayered case that began last September with VW’s admission that it had installed cheatware – a software “defeat switch” – in nearly 600,000 VW, Audi and Porsche models in the United States. The same software was also found in nearly 10 million other vehicles worldwide. The cars represented the VW brand name and its subsidiaries, Audi, Porsche, Seat and Skoda. Volkswagen is not only facing action by the Environmental Protection Agency (EPA) but also by the Justice Department, which has launched a racketeering lawsuit seeking $46 billion for emissions violations. And, the automaker is facing criminal probes in Germany, France, Italy, South Korea and India. Also, 48 attorneys general have launched suit against the automaker and hundreds of consumer lawsuits, seeking damage, have been filed.
The FTC action seeks “permanent injunctive relief, rescission, restitution, the refund of monies paid, disgorgement of ill-gotten monies and other relief.” The suit said that “consumers suffered billions of dollars in injury,” though no specific amount was mentioned in the FTC action.
Commenting on the action, FTC Chair Edith Ramirez said that for years “Volkswagen’s ads touted the company’s ‘Clean Diesel’ cars even though it appears Volkswagen rigged the cars with devices designed to defeat emissions tests. Our lawsuit seeks compensation for the consumers who bought affected cars based on Volkswagen’s deceptive and unfair practices.”
Volkswagen’s entire “Clean Diesel” campaign – commercials, print ads, news releases, emails and online videos – pushed the premise that VW’s “clean diesel” engines had low emissions of oxides of nitrogen (NOx). The cars were also called “environmentally conscious,” “eco-conscious” or “green,” the FTC action emphasized.
Volkswagen has set aside billions to deal with repair costs (the initial set-aside was $7.3 billion. However, that figure is likely too small) to the 11 million vehicles affected by Dieselgate. Automotive observers, however, believe that, by the time the issue has finished, it will have cost the automaker more than $25 billion.
The agency filed its suit in the Northern District of California not only because it is the court handling the consolidated consumer litigation arising from the scandal. By using this venue, though, FTC can also take part in any settlement over the matter. Corporations often prefer settlements to years of uncertain litigation.
In a statement issued Tuesday, Volkswagen said that it had “received the complaint and continues to cooperate with all relevant U.S. regulators, including the Federal Trade Commission. 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.”
The Dieselgate scandal had its beginnings in the early 2000s when the automaker was designing a new generation diesel powerplant that ultimately received the designation EA 189. The engine was a four-cylinder and ranged in displacement from 1.2- to 2.0-liters. In its early development, the development team was committed to buying a proven pollution control system using “Blue Tec,” from Mercedes-Benz. The reason for this commitment was the engine development chief at the time was familiar with the technology. However, since the head of the program was also an “outsider,” others on the engineering staff preferred to develop their own control system. Or, one they thought would work.
The engine development chief left and the engineers went to work on a plan using a common rail injection system, higher swirl, more precise delivery and a higher-pressure pump that would, in theory, produce cleaner emissions. It didn’t work and the engineering team decided it needed to game the regulators by introducing the “defeat switch” engine management system that ultimately led to Dieselgate. From 2009 to 2015 vehicles emitting up to 40 times U.S. emissions standards were manufactured and sold. Of course, VW didn’t make this known until 2015 when the company admitted it to regulators.
During this period VW marketing suggested that the automaker’s vehicles reduced NOx emissions by 90 percent, the FTC said. In a 2015 TV commercial, an actor held a white scarf up to a VW Golf SportWagen TDI’s tailpipe, calling everything clean. The tagline for the ad, said the FTC in its filing, concluded: “Volkswagen TDI Clean Diesel: Like really clean diesel.” That video, the agency said, was seen by 9 million viewers.
USA Today provided much of the information for this report. Other sources included Wikipedia and the byteclay.com.