This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
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 appealed the decision. In its ruling, the Court of Appeal of Madrid found the objection of territorial incompetence raised by VW to be well-founded, consequently recognizing the jurisdiction of the Barcelona Court. The case has thus reverted to the trial court and is now pending before the Barcelona Court.
- 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. VW appealed the first-instance judgment before the Court of Appeal of Venice. In its decision, the Court of Appeal of Venice found the alleged conduct to be established but the material damage not proven. Consequently, partially amending the first-instance judgment, it recognized a right to compensation for the class members solely for moral damages, quantified at €300 each. While the deadlines for appeal to the Supreme Court were pending, the parties reached a settlement agreement.
- 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. In the end, the Portuguese Supreme Court deemed the case non-justiciable through the class action mechanism due to the heterogeneity of positions among individual class members, thus lacking homogeneity.
- 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 assessed the merits of the case. In its ruling, the Belgian Court granted to class member a redress equal to 5% of the paid purchase price for the buyers/current owners and at 5% of the difference between the purchase price and sale price for buyers/not-actual owners unless, in the latter scenario, the sale price exceeds the purchase price. This applies to only buyers who did not take the opportunity to have the software update installed in their vehicle.
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.
Read external updates on Dieselgate actions across the world:
Read more about the Dieselgate scandal and Euroconsumers’ response across our website:
25.01.21 Dieselgate: time to compensate all European consumers
07.07.20 Dieselgate how have consumers’ right been impacted (webinar)
06.07.20 Press release Dieselgate: Letter to EU leaders
25.05.20 German courts confirm Dieselgate ruling but millions of consumers are yet to be
compensated
14.02.20 All Dieselgate victims are equal and should be treated that way!
Share:
