FTC Wants Volkswagen to Pay American Consumers for Deceptive ‘Clean Diesel’ Ads

Seeks a court order to compensate buyers

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The Federal Trade Commission has run out of patience with Volkswagen and its advertising campaigns.

Today the FTC filed a complaint in federal court charging the auto giant with repeatedly making deceptive claims about its cars' "clean diesel" features in a series of ad campaigns. The complaint urges the court to issue an order requiring the company to compensate American consumers "who bought or leased an affected vehicle between late 2008 and late 2015" while also preventing VW from making such false claims in future campaigns.

Last October, the organization announced it had joined forces with the EPA and the Justice Department to investigate these claims less than one month after the EPA issued a notice of violation regarding VW's now-infamous TDI diesel engines. Today's announcement specifically concerns a series of ads created by the Los Angeles offices of Deutsch, which has been VW's U.S. creative agency of record since 2009. The agency did not immediately respond to a request for comment.

The complaint "was made because VW made widespread, demonstrably untrue claims that were material to the sales of all of its TDI vehicles," said James Kohm, the associate director for the enforcement division of the Federal Trade Commission's Bureau of Consumer Protection.

He added, "There were four kinds of claims that were problematic: that the cars were environmentally friendly; that they have low emissions including those of nitrogen oxide; that the vehicles would have high resale value when, in fact, now that the truth is known, they have extremely low resale value. … VW has admitted that they had a device in the car that was activated when it was undergoing an EPA admissions test and then dropped [total emissions] more aggressively."

The FTC did not outline a specific amount it wants VW to pay, leaving that question to the court. It stated the legal system should "award such additional relief as the Court finds necessary to redress injury to consumers resulting from Defendant's violations of the FTC Act, including but not limited to, rescission or reformation of contracts, restitution, the refund of monies paid, and the disgorgement of ill-gotten monies."

This judgment follows the FTC's decision earlier this month to cite Lord & Taylor for failing to properly label a campaign that paid social media fashion influencers to promote its spring 2015 line.

"This was in some sense an easier case [than Lord & Taylor]," said Kohm. "It wasn't a mistake; it was a device that had to be created on purpose, and the ads were completely public. It's standard operating procedure, but this is a very large, significant case."

As in the Lord & Taylor case, the FTC will continue to monitor Volkswagen's advertising campaigns to ensure no further violations occur.

The company said it will continue to cooperate with the ongoing investigation. "Volkswagen has received the complaint and continues to cooperate with all relevant U.S. regulators, including the Federal Trade Commission," a spokesperson told Adweek. "Our 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."

VW launched its first post-scandal ad campaign in the U.K. last month in the interest of moving on, but the issue seems far from over.

In January, New York attorney general Eric T. Schneiderman claimed that VW had refused to turn over documents related to his investigation of the emissions scandal. And a whistleblower who worked for the car maker in Detroit filed suit earlier this month, charging that Volkswagen fired him after he flagged a superior about the alleged destruction of evidence.

Kohm told Adweek that the FTC's recent series of judgments does not hint at a more aggressive strategy. "It's right up the alley of what we've been doing for the last several decades," he said. "The FTC has, for a very long time under many administrations, been equally aggressive about false advertising complaints."

@PatrickCoffee patrick.coffee@adweek.com Patrick Coffee is a senior editor for Adweek.