The Federal Trade Commission filed suit against Volkswagen Group of America, charging the automaker with deceiving consumers in violation of Section 5 of the Federal Trade Commission Act with the advertising campaign for its allegedly "Clean Diesel" cars.
Over a seven-year period, consumers spent an average of $28,000 for approximately 550,000 Volkswagens and Audis they believed were low-emission, environmentally friendly vehicles that met emissions standards, and would maintain a high resale value, the agency alleged. In reality, the car company used illegal emission defeat devices to mask high emissions during government tests, which constituted a separate charge of unfair practices in violation of Section 5, according to the Commission.
The ad campaign (featuring claims like: "Diesel. It's no longer a dirty word.") included Super Bowl ads, print advertising, and online social media advertisements that often targeted "environmentally conscious" consumers, the FTC said. Promotional materials touted the "Clean Diesel" vehicles as producing low emissions ("With the new Jetta TDI Clean Diesel, you get a great car that's low on emissions…") and reducing nitrogen oxides (NOx) emissions by 90 percent. The vehicles actually emit up to 4,000 percent more than the legal limit of NOx, according to the agency's complaint.
Volkswagen's other deceptive claims included that the vehicles were "50-state compliant" and met "stringent emission requirements," but absent the emission defeat devices, the vehicles would not have passed any emissions standards, the FTC said.
These failures also decreased the affected vehicles' resale value despite VW's promises to the contrary, the agency added. Prices for the affected vehicles ranged from a low of $22,000 for a Volkswagen model to roughly $125,000 for the most expensive Audi model. Vehicles included TDI diesel models of Jettas, Passats, and Touareg SUVs and Audi models.
A separate count of the complaint focused on Volkswagen providing the means and instrumentalities for others to deceive consumers, such as ads, brochures, and other items.
"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 about the action. "Our lawsuit seeks compensation for the consumers who bought affected cars based on Volkswagen's deceptive and unfair practices."
In a California federal court complaint, the agency requested an injunction to prevent VW from engaging in future deceptive conduct as well as compensation for American consumers who bought or leased an affected vehicle between late 2008 and late 2015, estimating "billions" of dollars in consumer injury.
To read the complaint in FTC v. Volkswagen Group of America, click here.
Why it matters: The lawsuit is only the latest legal challenge to hit Volkswagen in response to the automaker's emissions scandal, joining consumer class actions and multiple suits filed by state attorneys general, as well as the Department of Justice's suit on behalf of the Environmental Protection Agency. The FTC action was filed "because VW made widespread, demonstrably untrue claims that were material to the sales of all of its TDI vehicles," James Kohm, the associate director for the enforcement division of the FTC's Bureau of Consumer Protection, toldAdweek. "[T]his is a very large, significant case."