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VW Promises Generous Compensation in Settlement Fund

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Volkswagen (VW) is taking the same route to settle claims concerning their emissions cheating devices that General Motors (GM) did with its ignition switch defect. They have hired the same attorney (Kenneth Feinberg) to manage a settlement fund for those consumers who wish to apply for compensation.

GM opened their settlement fund in August of 2014, and closed it on January 31, 2015. The fund received over 4,000 claims, but offered payouts to only a few hundred. VW has stated, however, that they will offer “generous” compensation packages to about 600,000 consumers affected by the emissions scandal.

VW Hasn’t Found a Solution to Their Emissions Problem

VW admitted last September that they had purposely installed so-called “cheating devices” on their diesel engines to get around U.S. emissions tests, while retaining advertised fuel efficiency and acceleration performance. These devices turned on certain emissions controls during testing, but then turned them back off again during regular driving, allowing the vehicle to reach performance expectations, but also causing vehicle emissions to rise above legal limits.

Since the scandal broke, regulators have been waiting for the company to come up with a recall solution. VW submitted a plan to the California Air Resources Board (CARB), but that plan was rejected as it failed to provide enough details—specifically, CARB required details about whether the proposed repairs would affect vehicle performance, and if so, how.

Critics have stated that consumers deserve to be compensated for the cost of vehicles they purchased, as they expected to get the performance and eco-friendly benefits that VW advertised. While the company is now stating that it intends to offer compensation, it’s still unclear what that compensation will look like. Will the company buy back the vehicles? Offer the equivalent in cash? Replace the parts or the cars?

VW Confident that Settlement Fund will Satisfy Customers

According to Consumer Affairs, VW has not been able to come up with a solution yet that everyone can agree on. The CARB rejection of the recall plan is one example of VW’s failure to provide an adequate repair or other method of making things right. Until that happens, the fund will remain in limbo and consumers will continue to wait.

Once a solution is agreed upon, VW is confident that they will be able to satisfy most customers with the settlement fund. The usual process is for customers to apply for payouts, and those applications that are approved will be compensated. Once a customer accepts such a settlement, however, he or she typically gives up the right to sue the company in an individual personal injury lawsuit.

VW Facing Hundreds of Lawsuits

Currently, over 500 plaintiffs have filed their own VW emissions lawsuits in various courts around the nation. Because of the high number of cases, the U.S. Judicial Panel on Multidistrict Litigation (JPML) consolidated all federally filed lawsuits into one court in the Northern District of California. There, the parties are working toward preparing a few select cases for trial, to gauge how juries may respond to the evidence.

The U.S. Justice Department has also filed a claim against VW on behalf of the Environmental Protection Agency (EPA), which involves nearly 600,000 vehicles sold in the U.S.

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  1. DALLAS TAYLOR says:
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    Curious if the VW pay out is only delegated to the individuals who put claims towards the company. I have not put a claim. Although I have lost tremendous value in my 2012 TDI Passat. Impossible to trade in! Any advice would be tremendously helpful, thanks in advance.