Dieselgate: the long and winding road to consumer compensation
Six years after the Volkswagen Dieselgate scandal broke, Euroconsumers is still fighting for consumer compensation across Europe. Find out our progress, our many actions, and how the global scandal has impacted on collective redress in the EU.
Discovery of the Dieselgate defeat device
In 2014 an independent research team testing Volkswagen diesel cars discovered a major discrepancy in their emissions data. The levels of nitrous oxide emissions in real-world driving conditions were up to 40 times higher than those recorded in laboratory conditions.
The company finally admitted in 2015 that software had been installed in the vehicles that could artificially reduce emissions under laboratory conditions. This ‘defeat device’ software was installed in around 11 million VW cars worldwide – 8 million of which were in Europe.
Consumer and environmental harm
Nitrous oxide is a potent greenhouse gas and Volkswagen’s illegal practice broke numerous environmental regulations and harmed public health. However, as well as lying to the public about the amount of pollution caused by their cars, VW breached numerous consumer protection laws.
They fraudulently misrepresented their product as meeting national regulations (and in the case of those who took out VW-own finance, engaging consumers in credit agreements for a vehicle that did not meet national requirements to be on the road). Misleading consumers in this way (by claiming their car was less polluting than it was) denied them the opportunity to make an informed choice of another model. Affected cars also saw a rapid decrease in value meaning consumers also lost out on resale value.
It turned out that even the remedies offered to consumers by Volkswagen caused their own issues. In 2018, Euroconsumers surveyed over 10,000 VW car owners in Belgium, Spain, Italy and Portugal who had installed an update intended too undo the defeat device. The survey found that 40% of people had experienced problems including an increase in fuel consumption and loss of engine power which some then had to pay to get put right. Consumers in the UK who returned their cars to a VW registered garage to be fixed, reported being put under pressure to pay for more work or services for minor faults.
Fighting for consumer rights
Euroconsumers was the first European consumer cluster to launch collective actions against Volkswagen to secure redress and compensation on behalf of those affected in its member
countries. This has been instrumental in calling for change at a European wide level. Here’s a brief summary of activity across Spain, Belgium, Italy and Portugal:
- OCU (Spain): in 2016 OCU filed a class action against VW-Audi Spain Group with 7,500 of its members. By January 2021, the Spanish Commercial Court found Volkswagen had used unfair commercial practices and that it must compensate affected consumers €3000 each. Volkswagen is appealing the decision.
- Altroconsumo (Italy): Altroconsumo bought a case against VW-Audi on behalf of 22,000 car owners in 2017. As proceedings continued, more consumers joined the action and in July 2021 VW Group was ordered to pay 63,000 consumers compensation of €3300 per person plus interest. Coming to a total of more than 200 million euros, this is the largest amount of damages ever recognised by a European court for a class action. Alongside
litigation, the Italian Competition Authority fined VW 5 million euros for unfair commercial practice and misconduct.
- Deco Proteste (Portugal): DECO has petitioned the Portuguese Ministry of the
Environment to investigate the fraud and impose sanctions. It also filed a lawsuit against Volkswagen, SEAT and the Portuguese main importer SIVA in October 2016 on behalf of 125,000 affected customers. An attempt by VW to deny Portuguese Dieselgate victims access to Portuguese courts to get redress was recently overruled by the Portuguese Supreme Court of Justice. Court proceedings are ongoing.
- Test Achats/Test Aankoop (Belgium): Test-Achats first filed the collective action in 2016 and was granted an opt-out by the Court, which means it can represent all Dieselgate victims in the country. After discussions to reach a settlement agreement during a mandatory negotiation period failed, the Belgian Court is now assessing the merits of the case. New pleadings are scheduled for 2022.
Wave of class actions across the world
The wide reach of collective proceedings on the same charge against the same company in countries including the Netherlands, Germany, USA, Australia, Chile and India has seen it described as the “first global parallel litigation”. However while the circumstances are shared, the outcomes have been far from consistent. Levels of compensation differ wildly across jurisdictions with some supplemented with civil penalties and criminal indictments and others only offered remedial action.
For example, In the US Volkswagen agreed to pay up to $10,000 each in compensation to affected individuals, plus a $2.7bn fine to compensate for the environmental damage, and another $2bn to support clean vehicle projects. Germany actually had to implement a new consumer collective procedure to deal with this case. In the end, VW and vzbv (the country’s federal consumer organisation) reached an agreement where around 260,000 consumers received between €1350 and €6257 each.
Volkswagen is taking advantage of the presence of different legal frameworks and collective procedures to continue to argue that their decision to compensate consumers in one place is
not relevant elsewhere. Euroconsumers wrote to Volkswagen’s Board of Directors many times to entreat them to treat consumers equally. When they eventually responded in 2020, they stated that they would not compensate consumers in Belgium, Italy, Spain and Portugal as they had “not incurred any loss or damage” despite other national courts finding the contrary.
The fight for equal treatment
Fighting cases on a country-by-country basis seems odd in a single market such as Europe –
particularly given the unequivocal judgements against the company in some of
the highest courts in Europe. Euroconsumers wants consumers who are victims of the same wrongdoing by the same company to be treated on equitable terms.
A Euroconsumers letter to the European Commission following the settlement in Germany, requested that all EU consumers affected by the Dieselgate scandal be treated equally and fairly. In 2020, as a result of the letter the Commission and the Consumer Protection Cooperation (CPC) network of national consumer authorities finally formally recognized that Volkswagen’s practices violated EU consumer protection law and in a joint statement urged Volkswagen to find a fair solution on compensation for all European consumers.
Euroconsumers encourages the European Commission to now take all necessary steps to make sure EU consumers are compensated without further delay, and to clarify what
enforcement measures will be taken if this does not happen. They will also keep
up the pressure at the corporate level, addressing again the Volkswagen Board
directly and by engaging with some of VW’s biggest shareholders who have been
critical of their handling of the scandal.
The long term impact on collective redress in Europe
The European Commission adopted its long discussed EU-wide collective redress directive in
2020, partly in response to the disparate options available for redress in the Dieselgate case. The directive requires every state to establish representative collective redress options for any sectors governed by provisions which protect the interests of consumers.
The directive goes some way to making sure that consumers are able to access the same processes wherever they live. But consumer protection is nothing without enforcement and so Euroconsumers and its organisation will continue to lead important class actions which benefit consumers all across the single market.