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Massive Volkswagen Settlement Would Buy Back Cars, Issue Cash Payments to Consumers


Most U.S. class-action settlements have resulted in a small per-person cash payouts or account credits to consumers. Not so with Volkswagen, which announced early Tuesday it was preparing for a settlement that could easily top $15 billion, stemming from a diesel emissions cheating scandal that has financial analysts, consumer advocates and the entire auto industry abuzz.

The automaker still faces possible criminal charges after admitting to what Deputy U.S. Attorney General Sally Yates called "the most flagrant violations of our consumer and environmental laws in our country's history."  

Volkswagen's troubles started in 2014, when California Air Quality Board officials launched an investigation into the emissions systems on a pair of VW models. By late 2015, the U.S. Environmental Protection Agency had taken up the case, calling on the company to recall a handful of models sold in the U.S. It was then Volkswagen officials fessed up to selling and leasing vehicles equipped with technology that sidestepped environmental laws and regulations.

Idaho consumers will be part of the massive settlement, which affects owners and lessees of 2.0-liter diesel vehicles from model years 2009 through 2015. The settlement will give owners a choice of either a buy-back of the vehicle based on NADA "blue book" value, or a modification to the vehicle—provided Volkswagen can develop the technology (something it has yet to do). Additionally, the company must make cash payments to consumers ranging from $5,100 to $10,000 per eligible vehicle.

“The scope of Volkswagen’s fraudulent actions was unfathomable,” said Idaho Attorney General Lawrence Wasden as part of Tuesday's announcement. “Ensuring that companies make truthful statements and claims about their products is important to consumers and essential for the marketplace to work properly.”

The settlement is expected affect nearly 500,000 diesel-engine vehicles in the U.S., but still requires a judge's approval before it can go into effect. Owners can choose to decline Volkswagen's offer and sue the company on their own. The company agreed it would need to buy back or repair 85 percent of the affected vehicles or pay even more money into an environmental trust fund.