Rutledge Reaches Settlement with Volkswagen on Behalf of Arkansans
June 29, 2016
LITTLE ROCK – Arkansas Attorney General Leslie Rutledge has reached a settlement requiring Volkswagen to pay more than $570 million nationwide for violating laws prohibiting unfair or deceptive trade practices by marketing, selling and leasing diesel vehicles equipped with illegal and undisclosed defeat device software.
In September 2015, Rutledge joined the executive committee of a multistate investigation into Volkswagen for altering its emissions software. Rutledge says that by participating in the executive committee, attorneys within her office were able to take an active role in the investigation and resolution of this case to ensure that Arkansans receive proper compensation.
The settlement resolves consumer protection claims raised by this multistate investigation, which included 43 states, against Volkswagen AG; Audi AG; Volkswagen Group of America Inc.; Porsche AG; and Porsche Cars, North America Inc. – collectively referred to as Volkswagen.
This settlement is part of a series of agreements that will provide cash payments to affected consumers, requires Volkswagen to buy back or modify certain VW and Audi 2.0-liter diesel vehicles and prohibits Volkswagen from engaging in future unfair or deceptive acts and practices in connection with its dealings with consumers and regulators.
“Volkswagen intentionally lied to Arkansans and made them believe that their ‘green’ vehicles were better for the environment,” said Attorney General Rutledge. “Arkansas consumers deserve to be treated honestly and fairly when they purchase a vehicle, but Volkswagen violated that trust. This settlement holds them accountable and provides much-owed restitution to consumers.”
The investigation confirmed that Volkswagen sold more than 570,000 2.0- and 3.0-liter diesel vehicles in the U.S. equipped with “defeat device” software intended to circumvent emissions standards for certain air pollutants and actively concealed the existence of the defeat device from regulators and the general public.
Volkswagen made false statements to Arkansans in their marketing and advertising, misrepresenting the cars as environmentally friendly or “green” and that the cars were compliant with emissions standards.
Under this settlement, Volkswagen is required to implement a restitution and recall program for more than 475,000 owners and lessees of 2.0-liter diesel vehicles, of the model years 2009 through 2015 at a maximum cost of just over $10 billion. This includes 2,540 vehicles in Arkansas.
Once the consumer program is approved by the court, affected Volkswagen owners will receive restitution payment of at least $5,100 and a choice between:
- A buy back of the vehicle (based on pre-scandal NADA value); or
- A modification to reduce emissions provided that Volkswagen can develop a modification acceptable to regulators. Owners will still be eligible to choose a buyback in the event regulators do not approve a fix. Owners who choose the modification option would also receive an Extended Emission Warranty and a Lemon Law-type remedy to protect against the possibility that the modification causes subsequent problems.
The consumer program also provides benefits and restitution for lessees (restitution and a no-penalty lease termination option) and sellers (50 percent of the restitution available to owners) after Sept. 18, 2015 when the emissions-cheating scandal was disclosed.
Additional components of the settlements include:
- Environmental mitigation fund: Volkswagen will pay $2.7 billion into a trust to support environmental programs throughout the country to reduce emissions of nitrogen. This fund, also subject to court approval, is intended to mitigate the total, lifetime excess nitrogen emissions from the 2.0-liter diesel vehicles.
- Additional payment to the states: In addition to consumer restitution, Volkswagen will pay to the states more than $1,000 per car for repeated violations of state consumer-protection laws, amounting to $570 million nationwide. This amount includes $3 million paid for affected vehicles Volkswagen sold and leased in Arkansas.
- Zero emission vehicles: Volkswagen has committed to investing $2 billion over the next 10 years for the development of non-polluting cars, or zero emission vehicles, and supporting infrastructure.
- Preservation of environmental claims: The settlement by state attorneys general preserves all claims under state environmental laws, and Arkansas maintains the right to seek additional penalties from Volkswagen for its violations of environmental and emissions laws and regulations.
Volkswagen will also pay $20 million to the states for their costs in investigating this matter and to establish a fund that state attorneys general can utilize for future training and initiatives, including investigations concerning emissions violations, automobile compliance and consumer protection.