June 28, 2016

Attorney General George Jepsen today announced that, under a settlement with state attorneys general, Volkswagen will pay more than $570 million for violating state laws prohibiting unfair or deceptive trade practices by marketing, selling and leasing certain diesel vehicles equipped with illegal and undisclosed emissions defeat devices designed to circumvent emissions standards.

"Volkswagen lied," said Attorney General Jepsen. "It lied to consumers and to regulators by stating that its vehicles were not only fuel efficient but also clean, which was not just misleading but downright false. The company's conduct was intentional, calculated and egregious. Today's settlement resolves the significant violations of state consumer protection laws, and the scope of this settlement should serve as a reminder to all companies, across all sectors, that gross misrepresentation to the public and to regulators is not only illegal, it's exceptionally bad for business."

Today's agreement was announced concurrently with separate settlements that will provide cash payments to affected consumers and require Volkswagen to buy back or modify certain Volkswagen and Audi 2.0-liter diesel vehicles. Those settlements were negotiated by the United States Environmental Protection Agency and the Department of Justice; the Federal Trade Commission; the state of California and the California Air Resources Board (CARB); and car owners in private class action lawsuits.   

Attorney General Jepsen continued, "Separately, Volkswagen has reached agreements that will attempt to make whole consumers who have purchased or leased these vehicles. Those agreements are subject to court approval and some details, including the feasibility of a fix for vehicles equipped with a defeat device, remain to be developed. While my office is not a party to those settlements, Connecticut consumers should be aware of these developments, and my office will continue to monitor those agreements throughout their implementation."

Connecticut served as one of six lead states in the coalition of over 40 attorneys general that investigated Volkswagen's conduct; Connecticut will receive approximately $16,281,335 as its share of the settlement's civil penalties, of which the majority –  approximately $16 million – will go to the state's General Fund. The remainder of funds will be deposited into consumer protection funds maintained by the Department of Consumer Protection and Attorney General's Office, which are used to support consumer protection investigations, advocacy and litigation.

The settlement resolves Connecticut's claims against Volkswagen only under the state's consumer protection laws, particularly the Connecticut Unfair Trade Practices Act (CUTPA). The settlement preserves Connecticut's environmental law claims. The state of Connecticut will pursue additional penalties from Volkswagen for its violations of environmental and emissions laws and regulations, and the state's investigation into those environmental claims is ongoing.

"Consumers will do business with companies because they are good actors that they've grown to trust. When companies step over the line, consumers lose confidence. As regulators, our job is to hold the companies accountable and help make consumers whole," said state Department of Consumer Protection Commissioner Jonathan Harris. "We're pleased that consumers who purchased one of these vehicles will now have the opportunity to receive a buyback or a modification to their vehicle when one becomes available."

The attorneys generals' investigation confirmed that Volkswagen sold more than 570,000 2.0 and 3.0-liter diesel vehicles in the United States – including 11,911 vehicles in Connecticut – that were equipped with defeat device software intended to circumvent applicable emissions standards for certain air pollutants and that Volkswagen actively concealed the existence of the defeat devices from regulators and the public. Volkswagen made false statements to consumers in their marketing and advertising, misrepresenting the cars as environmentally friendly or "green" when, in fact, the company knew that the vehicles emitted harmful nitrogen oxides (NOx) at rates significantly higher than permitted by law.

Volkswagen has agreed that it will not engage in future unfair misrepresentations or deceptive acts or practices in connection with its dealings with consumers and state regulators. Volkswagen will pay an additional $20 million to compensate the states for the costs of investigating this matter and to establish a fund that state attorneys general can utilize in future consumer protection initiatives, including training, emissions violations, automobile compliance and consumer protection investigations.

Under the separate settlements that resolve claims that were or could be brought by the United States Environmental Protection Agency and the Department of Justice; the Federal Trade Commission; the state of California and the California Air Resources Board (CARB); and car owners in private class action lawsuits, Volkswagen will be required to implement a restitution and recall program for more than 475,000 owners and lessees of 2.0-liter vehicles, with model years from 2009 to 2015, at a maximum cost of just over $10 billion.

The settlement does not address a modification for the 3.0 liter vehicles that contain a defeat device; discussions concerning 3.0 liter vehicles are ongoing. In the event that Volkswagen fails to agree to adequate consumer relief for 3.0 liter vehicles, the states have reserved their rights to pursue Volkswagen for appropriate relief.

Affected 2.0-liter diesel vehicles include:

If approved by the court, under the separate settlement, affected Volkswagen owners will receive a restitution payment of at least $5,100 as well as a choice between a buyback of the vehicle (based on pre-scandal NADA value) or a modification to the vehicle provided that Volkswagen can develop a modification that is acceptable to regulators. Under the separate agreement, owners would still be eligible to choose a buyback in the event regulators do not approve a modification. The consumer program also would provide benefits and restitution to lessees and sellers after September 18, 2015 when the emissions-cheating scandal was disclosed.

Additionally, if approved by the court the company would pay $2.7 billion into a trust to support environmental programs throughout the country to reduce NOx emissions. Under the terms of the mitigation trust, Connecticut would be eligible to receive more than $51,000,000 to fund mitigation projects. Volkswagen has also committed to investing $2 billion over the next 10 years for the development of non-polluting cars, or zero-emission vehicles, and supporting infrastructure.

Consumers who want to know how the separate agreements impact them and when they can expect relief should visit VWCourtSettlement.com.

The multistate coalition of attorneys general is led by the states of Connecticut, Massachusetts, New York, Oregon, Tennessee and Washington and today's agreement includes 43 states and territories. Today's settlement resolves the participating states' consumer protection claims against Volkswagen AG; Audi AG; Volkswagen Group of America, Inc.; Porsche AG; and Porsche Cars, North America, Inc. – collectively, Volkswagen.

Assistant Attorneys General Brendan Flynn; Jeremy Pearlman; Scott Koschwitz; Kirsten Rigney; Sharon Seligman; Lorrie Adeyemi, head of the Consumer Protection Department; and Matthew Levine, head of the Environment Department, are assisting the Attorney General with this matter.

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