U.S. Sen. Bill Nelson, the ranking Democrat on the Senate Commerce Committee, issued the following statement in response to the FTC’s move to seek compensation for consumers who purchased or leased “Clean Diesel” Volkswagens. Nelson asked the Federal Trade Commission in September to investigate Volkswagen marketing.
“This was one of the most egregious examples of a company deceiving the public,” said Nelson. “Hopefully, the court will provide adequate redress to consumers and send a strong message that this type of corporate behavior won’t be tolerated. ”
Below is the FTC’s release and Nelson’s September letter to the agency requesting an investigation. ____________________________________________
FEDERAL TRADE COMMISSION RELEASE
March 29, 2016
FTC Charges Volkswagen Deceived Consumers with its “Clean Diesel” Campaign
Seeks Compensation for Those Who Bought or Leased Affected VW and Audi Vehicles over Seven-Year Period
The Federal Trade Commission has charged that Volkswagen Group of America, Inc. deceived consumers with the advertising campaign it used to promote its supposedly “clean diesel” VWs and Audis, which Volkswagen fitted with illegal emission defeat devices designed to mask high emissions during government tests.
The FTC is seeking a court order requiring Volkswagen to compensate American consumers who bought or leased an affected vehicle between late 2008 and late 2015, as well as an injunction to prevent Volkswagen from engaging in this type of conduct again. In a complaint filed in federal court, the FTC alleges that during this seven-year period Volkswagen deceived consumers by selling or leasing more than 550,000 diesel cars based on false claims that the cars were low-emission, environmentally friendly, met emissions standards and would maintain a high resale value. The cars sold for an average price of approximately $28,000.
“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,” said FTC Chairwoman Edith Ramirez. “Our lawsuit seeks compensation for the consumers who bought affected cars based on Volkswagen’s deceptive and unfair practices.”
According to the FTC’s complaint, Volkswagen promoted its supposedly “clean” cars through a high-profile marketing campaign that included Super Bowl ads, online social media campaigns, and print advertising, often targeting “environmentally-conscious” consumers.
For example, Volkswagen promotional materials repeatedly claimed that its “Clean Diesel” vehicles have low emissions, including that they reduce nitrogen oxides (NOx) emissions by 90 percent and have fewer such emissions than gasoline cars. In fact, the FTC’s complaint states that they emit up to 4,000 percent more than the legal limit of NOx — a dangerous pollutant that contributes to environmental harms and respiratory ailments.
The complaint alleges that Volkswagen also claimed that “Clean Diesel” vehicles met “stringent emission requirements,” were “50-state compliant,” and would maintain a high resale value. Yet, according to the FTC’s complaint, these claims were also false because without the illegally installed software, the “Clean Diesel” vehicles would not have passed federal emissions standards and the hidden defeat devices will significantly reduce the vehicles’ resale value.
The FTC also charged that Volkswagen provided the means and instrumentalities for others to deceive consumers, and that installing the emissions defeat devices was an unfair practice.
The affected vehicles include 2009 through 2015 Volkswagen TDI diesel models of Jettas, Passats, and Touareg SUVs, as well as TDI Audi models. The suggested sale prices for the affected vehicles ranged from approximately $22,000 for the least-expensive Volkswagen model with a 2.0-liter engine to approximately $125,000 for the most-expensive Audi model with 3.0-liter engine.
The Commission vote authorizing the staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Northern District of California, San Francisco Division.
NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court. The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about consumer topics and file a consumer complaint online or by calling 1-877-FTC-HELP (382-4357).
September 22, 2015
The Honorable Edith Ramirez
Chairwoman, Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC 20530
Dear Chairwoman Ramirez:
Like many Americans, I am disturbed by Volkswagen’s shocking admission that the company intentionally deceived consumers and the public about the emissions of some of its Volkswagen and Audi diesel vehicles, which it marketed as being environmentally friendly. Specifically, Volkswagen admits that it deliberately installed software to control pollutants only during official emissions testing but not during normal vehicle operations on the road. As a result, these vehicles illegally emitted hazardous pollutants in violation of the Clean Air Act. Furthermore, Volkswagen’s claims about the environmental impact of its vehicles were false.
Although the Environmental Protection Agency (EPA) and the Department of Justice (DOJ) are exploring civil and criminal actions, respectively, against Volkswagen, the Federal Trade Commission (FTC) also has an appropriate role in investigating the company’s actions. As the nation’s foremost consumer protection agency, the FTC has sole authority to enforce section 5 of the Federal Trade Commission Act (FTC Act) and its broad prohibition against “unfair or deceptive acts or practices.” As the attached marketing material clearly illustrates, Volkswagen advertised their diesel cars as “clean diesel” and as otherwise environmentally friendly. Yet, contrary to these express claims, Volkswagen’s and Audi’s diesel vehicles, by design, were neither clean nor environmentally friendly, and they failed to comply with federal environmental laws.
I am outraged that VW would cheat its customers by deceiving them into buying a car that wasn’t what was advertised. As such, I ask that the commission explore possible remedies under the FTC Act to remedy consumers who relied upon Volkswagen’s deceptive claims.
While the FTC lacks civil penalty authority under section 5 and cannot wield the large stick of criminal prosecution, the commission is uniquely positioned to specifically represent the interest of consumers. The commission can seek consumer redress for Volkswagen’s deception, and it can also seek a full panoply of equitable remedies that would force Volkswagen to take actions to specifically address consumer harm. For instance, the commission could force Volkswagen to launch a comprehensive corrective marketing campaign that would cure the deception and inform consumers about their remedial options. The commission has entered into such consent agreements in the past.
This situation shows the importance of having multiple “cops on the beat” when it comes to consumer protection. The EPA and the DOJ have very important law enforcement and remedial roles to play when faced with the kinds of behavior at issue here. In establishing the FTC Act, however, Congress did not contemplate a bystander role for agency in the face of galling and unmitigated consumer deception. As an independent agency of Congress, the FTC has a key role to play – in cooperation with EPA and DOJ – as one of the cops on the beat to make sure consumers are protected. I urge the commission to exercise all of its authority on behalf of the American public.
Thank you for your attention to this matter.
Senator Bill Nelson