Hunton Retail Law Resource

On March 29, 2016, the Federal Trade Commission (“FTC”) filed suit against Volkswagen Group of America (“VW”), which includes Volkswagen of America and Audi of America, for its “Clean Diesel” advertisements.

The complaint alleges VW’s “Clean Diesel” ads made various deceptive claims, including that its diesel technology produced “30% fewer emissions” and reduced “nitrogen-oxide emissions by 90%.” The FTC alleges that the vehicles with VW’s “Clean Diesel” technology were also equipped with a “defeat device” designed to calibrate the vehicle’s emission system to produce legally-compliant emissions during standard emissions testing.

The complaint also alleges that VW spent tens of millions of dollars to advertise its “Clean Diesel” vehicles with the defeat device to “convey ‘diesel’s environmental and economic advantages’” and alleges that VW targeted “progressive and environmentally-conscious consumers.” In addition to VW’s environmental and emissions ads, the FTC also claims that VW’s ads claiming that its “Clean Diesel” vehicles would retain a higher resale value than other vehicles were deceptive.

The claims are brought under the authority of Section 5 of the FTC Act as “unfair or deceptive acts or practices in or affecting commerce.”

The claims include:

• Deceptive representations for VW’s claims that its “Clean Diesel” vehicles have lower emissions than comparable diesel vehicles, meet basic emissions standards, are environmentally friendly and would retain their resale value better than other vehicles.
• Failure to disclose material information to consumers that VW’s “Clean Diesel” vehicles contained defeat devices.
• VW provided the “means and instrumentalities for the commission of deceptive acts or practices” to distributors and dealers by supplying them with advertisements and promotional materials to sell “Clean Diesel” vehicles.
• Unfairness based on the theory that “consumers purchased or leased substantially different vehicles than the ones they thought they purchased and did not receive the benefit of their bargain” causing them “billions of dollars in injury.”

The FTC is seeking relief including “rescission or reformation of contracts, restitution, the refund of monies paid, and the disgorgement of ill-gotten monies.”