Multistate settlement reached with Volkswagen over emissions fraud

June 28, 2016

[box] “Car buyers rely on information they receive from manufacturers, and in this case, that information was a lie,” Attorney General DeWine said. “This was a profound breach of trust, and significant penalties are warranted.”[/box]
COLUMBUS, Ohio – Through a multistate settlement, Volkswagen is facing the loss of millions of dollars in order to correct a “defeat device” with diesel vehicles.

Ohio Attorney General Mike DeWine today announced Ohio’s participation in a multistate settlement requiring Volkswagen to pay more than $570 million for violating state laws prohibiting unfair or deceptive trade practices by marketing, selling, and leasing diesel vehicles equipped with illegal and undisclosed “defeat device” software.

The terms of the settlement, which will be filed with the Franklin County Court of Common Pleas for approval within 30 days, resolve claims relating to Volkswagen’s deceptive marketing practices and require Volkswagen to pay Ohio over $13 million.

The agreement is part of a series of state and federal settlements that will provide cash payments to affected consumers, require Volkswagen to buy back or modify certain VW and Audi 2.0-liter diesel vehicles, and prohibit Volkswagen from engaging in future unfair or deceptive acts and practices.

“Car buyers rely on information they receive from manufacturers, and in this case, that information was a lie,” Attorney General DeWine said. “This was a profound breach of trust, and significant penalties are warranted.”

Today’s settlement stems from an investigation by a number of states’ attorneys general that found Volkswagen sold more than 570,000 2.0- and 3.0-liter diesel vehicles in the United States equipped with “defeat device” software intended to circumvent applicable emissions standards for certain air pollutants and that it actively concealed the existence of the defeat device from regulators and the public. Volkswagen’s advertising and marketing materials falsely represented the cars as environmentally friendly or “green” in spite of its knowledge that the vehicles emitted harmful oxides of nitrogen (NOx) at rates many times higher than the law permitted.

Moreover, cases like this just go to show how important it is to ensure that any software installed in a vehicle has been installed and tested in line with Motor Industry Software Reliability Association (MISRA) guidelines. Accordingly, in case you were not already aware, the MISRA coding standard provides a comprehensive set of guidelines to protect against security vulnerabilities and program failures as a result of software issues. You can find more information about why vehicle software providers need to comply with MISRA guidelines here: https://www.parasoft.com/solutions/compliance/misra/.

Before entering into the combined settlement with Volkswagen, the attorneys general confirmed that separate federal court orders will require the company to implement a consumer restitution and recall program for more than 475,000 owners and lessees of 2.0-liter diesel vehicles, of model year 2009 through 2015, at a maximum cost of just over $10 billion. This includes 13,998 vehicles in Ohio. This consumer restitution and recall program has been submitted today by the parties in the federal court matter for approval.

Once the consumer restitution and recall program is approved by the court, affected Volkswagen owners will receive restitution payments of at least $5,100 and a choice between:

A buyback of the vehicle (based on its pre-scandal value); or
A modification to reduce NOx 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.
The consumer program also provides benefits and restitution for lessees and sellers after September 18, 2015, when the emissions-cheating scandal was disclosed.

The full details of the consumer restitution program will be available online at VWCourtSettlement.com and www.ftc.gov/VWSettlement.