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June 28, 2016

Volkswagen to Buy Back or Fix VW & Audi Cars, Compensate Iowa Owners $18.7 Million through Emissions Fraud Settlements

VW to pay more than 3,600 Iowa owners of affected cars at least $5,100, buy back or fix falsely-marketed diesel cars, address environmental harms, and pay state nearly $3.5 million

DES MOINES – Volkswagen will pay owners of certain VW and Audi diesel cars at least $5,100 and buy back or fix cars that the company designed to illegally manipulate emissions test results, through coordinated partial settlements involving more than 40 states, several federal agencies, and class action plaintiffs.

The coordinated state, federal, and class action settlements will provide cash payments to affected consumers, require Volkswagen to buy back or modify certain VW and Audi 2-liter, 4-cylinder diesel vehicles, fund environmental-related projects, and prohibit Volkswagen from engaging in future unfair or deceptive acts and practices in connection with its dealings with consumers and regulators.

“Volkswagen very deliberately duped consumers, deceived the government and damaged our environment,” Attorney General Tom Miller said. “This is an unprecedented series of coordinated settlements involving an automaker, which is befitting considering VW’s incredibly brazen fraudulent conduct.”

Agreements Affect 3,600 Car Owners in Iowa
The German automaker sold more than 570,000 diesel cars nationwide, including more than 3,600 that are currently registered in Iowa, equipped with sophisticated “defeat device” software intended to circumvent emissions standards for certain air pollutants. The software senses when an emissions test is taking place and falsifies the results. Volkswagen actively concealed the existence of the defeat device from regulators and the public.

Volkswagen made false statements to consumers in its marketing and advertising by misrepresenting the cars as environmentally friendly or “green,” and falsely claimed the cars were compliant with federal and state emissions standards. In fact, the company knew the cars emit harmful nitrogen oxide at rates many times higher than the law permits.

The emissions cheating scandal was first discovered in 2013 by the International Council for Clean Transportation (ICCT), which commissioned West Virginia University researchers to test diesel car emissions. ICCT notified the U.S. Environmental Protection Agency and the California Air Resources Board about its findings.

“This is an unparalleled scandal involving an automaker,” Miller said. “These coordinated settlements hold VW accountable for its conduct, and sends a very strong message to other automakers that they’ll pay a very high price for not complying with state and national environmental and consumer protection laws.”

Volkswagen to Notify Consumers of Settlements
Under the settlements, which are subject to a federal judge’s approval, Volkswagen must implement a nationwide restitution and recall program for more than 475,000 affected owners and lessees of 2-liter diesel vehicles, at a maximum cost of just over $10 billion.

The vehicles affected by the settlements include cars with 2-liter diesel engines produced in model years 2009 through 2015. (See chart below for list of affected vehicles.) Negotiations are ongoing regarding cars with 3-liter engines.

Affected Consumers to Receive Payment, Option of Fix or Buyback
Once the court approves consumer program terms, Volkswagen will send affected owners a restitution payment of at least $5,100 and a choice between a vehicle buyback (based on pre-emissions scandal NADA value), or a modification to reduce nitrogen oxide emissions – provided that Volkswagen can develop one 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 after September 18, 2015, when the emissions-cheating scandal was disclosed (50 percent of the restitution available to owners).

Additional Settlement Terms
Additional terms of today’s settlements include:

  • Additional payment to states: In addition to consumer restitution, Volkswagen will pay states more than $1,000 per car for repeated violations of state consumer protection laws, amounting to $570 million nationwide. This amount includes $3,496,771 to Iowa for affected vehicles Volkswagen sold and leased in the state.
  • Environmental Mitigation Fund: Volkswagen will pay $2.7 billion into a trust to support environmental programs throughout the country to reduce nitrogen oxide emissions. This fund, also subject to court approval, is intended to mitigate the total, lifetime excess nitrogen oxide emissions from the 2-liter diesel vehicles identified below. Under the terms of the mitigation trust, Iowa is eligible to receive $20,179,540.80 to fund mitigation projects.
  • Zero-emission vehicles: Volkswagen commits to investing $2 billion over the next 10 years for the development of non-polluting cars, or zero-emission vehicles (ZEV), and supporting infrastructure.

Volkswagen will also pay $20 million to the National Association of Attorneys General (NAAG) for states’ 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.

Today’s coordinated settlements partially resolve consumer claims from participating states against Volkswagen AG, Audi AG, and Volkswagen Group of America Inc., Porsche AG and Porsche Cars, North America Inc. – collectively referred to as Volkswagen. They also partially resolve actions against Volkswagen brought by the United States Environmental Protection Agency (EPA) and Department of Justice (DOJ), the Federal Trade Commission (FTC), and car owners in private class action suits.

More information on the settlement is available at VWcourtsettlement.com.

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