Volkswagen Emissions Scandal Prompts Consumer Lawsuits

The Environmental Protection Agency (EPA) has launched an investigation into the German automaker Volkswagen’s advertising practices, after it was discovered the company programmed engine management software in some VW diesel cars to turn on emission control systems only when being tested.

Once those cars were put on the road, they would emit up to 40 times more emissions, the EPA says. The VW diesel emissions investigation is likely to trigger a recall, and a flurry of consumer lawsuits may prompt the company to compensate individual car owners.

EPA Investigates Volkswagen Diesel Emissions

On Sept. 18, 2015, the EPA accused automakers Volkswagen and Audi of installing software on 482,000 diesel cars in the U.S. to evade federal emission regulations, potentially exposing people to harmful pollutants.

The German automaker adopted what the EPA called a “defeat device” to trick U.S. regulators into believing that its cars met Clean Air Act standards, the federal agency said in a statement. The technology tricks regulators into believing that four-cylinder diesel cars comply with emissions standards, but the cars are actually emitting harmful pollutants at rates of up to 40 times above the acceptable standards.

EPA regulators said that Volkswagen adopted a “sophisticated” algorithm that turned on vehicles’ full emissions controls when it detected they were being tested for emissions performance.

“We intend to hold Volkswagen responsible,” Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance, told reporters in a conference call.

“VW was concealing the facts from the EPA, the state of California and from consumers. We expected better from VW,” Giles said. “We thought it was important to inform the public right away of these violations.”

“VW may be liable for civil penalties and injunctive relief for the violations alleged,” the EPA said in a statement.

EPA and California regulators discovered the device after researchers at West Virginia University and the International Council on Clean Transportation “raised questions about emissions levels” in Volkswagen cars, the federal agency said.

VW Faces Fines for Clean Air Act Violations

The company faces fines for violations of the Clean Air Act of up to $37,500 for each affected VW emissions recall vehicle. At an estimated 482,000 vehicles, the potential fines could reach as much $18 billion in the U.S. alone. Federal lawsuits will be separate from any individual lawsuits that affected consumers may bring.

What’s more, European regulators are expected to place Volkswagen under intense scrutiny. And the Volkswagen scandal could bode poorly for automaker in the world’s largest vehicle market, China, where Volkswagen is No. 1 by market share.

Volkswagen said it would set aside 6.5 billion euro, or $7.3 billion, in its third quarter to address the matter and warned that the amount could change.

Volkswagen Class Action Lawsuit Investigation

Volkswagen diesel buyers paid anywhere from $1,000 to $7,000 more for car equipped with the falsely advertised fuel-saving engines under the “Clean Diesel” moniker, compared with the usual gas engines.

It is believed that Volkswagen won’t be able to make the vehicles comply with emissions standards without substantially degrading their performance characteristics, including their horsepower and their efficiency.

As a result, even if Volkswagen is able to make vehicles EPA compliant, the VW owners will nonetheless suffer actual harm and damages because their vehicles will no longer perform as they did when purchased and as advertised.

UPDATE: On June 28, 2016, Volkswagen reached proposed settlements with both the U.S. Department of Justice and the U.S. Federal Trade Commission following the VW emissions scandal. VW’s deal with the DOJ includes up to $14.7 billion along with vehicle buyback provisions as well as funding for pollution control programs. In addition to the DOJ settlement, Volkswagen will also spend up to $10 billion in a buyback and lease termination settlement with the FTC that is expected to include about 475,000 vehicles.

UPDATE 2: The Volkswagen, Audi diesel emissions class action settlement is now open! Click here to file a claim!