VW faces potential $15bn penalty as US watchdog sues over green ad campaign

Volkswagen faces billions of dollars in potential new penalties after the leading US consumer watchdog hit the carmaker with a lawsuit over its emissions cheating scandal.

The Federal Trade Commission is pursuing compensation for consumers that could rise beyond $15bn, according to a lawsuit filed yesterday seeking the repayment of “illgottenmonies”.

The FTC alleges that VW systematically deceived customers over seven years with an advertising campaign promoting “clean diesel” vehicles that were in reality much dirtier than

government rules permitted.

VW has admitted to equipping up to 11m dieselpowered cars around the world with software that tricked regulators by reducing nitrogen oxide emissions only when pollution tests

were under way.

Six months after the scandal broke, VW finds itself surrounded by hostile forces itching to punish it, ranging from the FTC and the US Department of Justice to the French government

and German prosecutors.

Even before the FTC lawsuit, UBS analysts were predicting the scandal would end up costing the carmaker €38bn, including €10bn in civil penalties and €9bn in criminal fines.

“It seems there is no light at the end of the tunnel so far,” said Ingo Speich, portfolio manager of Union Investment, a VW shareholder.

Edith Ramirez, FTC chair, said the lawsuit “seeks compensation for the consumers who bought affected cars based on Volkswagen’s deceptive and unfair practices”.

It relates to 550,000 vehicles sold since late 2008. If the FTC secured compensation equal to an average $28,000 sale price for the vehicles, which would be consistent with past

cases, it would add up to more than $15bn.

The case will be decided in a district court in San Francisco but VW could seek a settlement with the FTC.

The lawsuit lays out in excruciating detail how VW touted the greenness of vehicles whose emissions, it said, were 90 per cent less than traditional diesel cars. Seeking to woo ecoconscious

consumers, VW compared the environmental impact of driving the cars to riding a bike, arranged for the actress Gwyneth Paltrow to arrive in one at a Hollywood premiere

and peddled the slogan: “Green has never felt so good.”

 Barney Jopson Washington Patrick McGee Frankfurt Peter Campbell London