FTC Sues Volkswagen Over Its 'Clean Diesel' Vehicle Advertising

   (FROM THE WALL STREET JOURNAL 3/30/16) 
   By Sara Randazzo

The Federal Trade Commission added to Volkswagen AG's legal woes with the filing of a complaint 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 doesn't 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, benefiting their resale value.

The judge overseeing the consolidated litigation has pushed Volkswagen to strike a quick deal with consumers, giving 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.

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.

Separately, the auto maker said it would recall some 800,000 Volkswagen and Porsche sport-utility vehicles to fix foot pedals that could become loose while driving.

The recall affects two of the company's best-selling SUVs, 409,477 Porsche Cayenne and 391,000 Volkswagen Touareg vehicles. It also is recalling all 5,561 e-Golf battery-electric cars sold in the U.S. between May 21, 2014, and March 1, 2016, because of faulty battery software that could cause the car to stall and crash, according to a report filed with the National Highway Traffic Safety Administration.

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Mike Spector and William Boston contributed to this article.

(END) Dow Jones Newswires

March 30, 2016 02:48 ET (06:48 GMT)

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