FTC Sues Volkswagen Over Advertising of Diesel Vehicles

The Federal Trade Commission added to Volkswagen AG’s legal woes with the filing of a complaint on Tuesday claiming the auto maker’s advertising falsely touted its diesel vehicles as environmentally friendly.

The FTC said in October that it was investigating Volkswagen’s advertising practices, weeks after the company admitted it installed some 600,000 U.S. vehicles with software meant to trick emissions tests.

The false-advertising complaint was filed in federal court in San Francisco, where civil litigation against Volkswagen has been consolidated. As part of the consolidated litigation, the FTC would be allowed to be part of any global settlement Volkswagen reaches in that court. The FTC does not have the authority to impose fines.

Its complaint claims Volkswagen’s U.S. arm falsely told consumers its “clean diesel" vehicles had low emissions, complied with state and federal emissions standards and were environmentally friendly, giving them a high resale value.

The federal judge overseeing the consolidated litigation has pushed Volkswagen to strike a quick deal with consumers, and gave the company until April 21 to come up with a concrete proposal on how it plans to fix the affected vehicles.

Volkswagen said Tuesday that it “continues to cooperate with all relevant U.S. regulators" and that the company’s “most important priority is to find a solution to the diesel-emissions matter, and earn back the trust of our customers and dealers as we build a better company."

The Wolfsburg, Germany-based company spent tens of millions of dollars on an advertising campaign, the FTC suit claims, to tout the “environmental and economic advantages" of diesel. Advertisements included such taglines as “Diesel. It’s no longer a dirty word," “Green has never felt so right," and claims that the cars are “clean as a whistle," according to the suit.

In one advertising video detailed in the complaint, testers placed white coffee filters on the tailpipes of a Volkswagen Touareg and a traditional diesel vehicle to see which was cleaner after 10 minutes. After the “test," the Touareg filter is still sparkly white, while the other has a black stain.

Some ads targeted by the FTC claimed the diesel cars reduced nitrogen oxide emissions by 90% and produced fewer such emissions than standard gasoline cars. In reality, according to the complaint, the cars emitted up to 4,000% more than the legal limit of nitrogen oxide, a harmful pollutant.

The agency said it is seeking a court order requiring Volkswagen to compensate American consumers who bought or leased the diesel cars between late 2008 and late 2015, as well as an injunction blocking Volkswagen from engaging in any similar conduct in the future.

The suit adds to mounting litigation and other probes engulfing Volkswagen worldwide on account of the auto maker’s emissions cheating. The U.S. Justice Department sued Volkswagen in January, alleging the German car giant violated federal clean-air law by selling diesel-powered vehicles with software that allowed them to pollute more on the road than during government emissions tests. Sara Randazzo And Mike Spector, The Wall Street Journal – March 29, 2016

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