Will Volkswagen’s penalty be high enough?

Updated 6:32 PM EDT, Thu September 24, 2015
01:19 - Source: CNN
Volkswagen diesel emissions scandal widens

Story highlights

Marta Tellado: Consumers, thoroughly betrayed by VW over falsified emissions, are used to big car companies not being fairly punished

Not this time, says Tellado -- consumer advocates must demand VW pay back customers

Regulators must ensure it won't happen again, she writes

Editor’s Note: Marta Tellado is president and CEO of Consumer Reports. The opinions expressed in this commentary are solely those of the author.

CNN —  

By now, consumers around the world are familiar with the revelation this week that Volkswagen – the largest automaker and one of the 15 largest companies in the world – has admitted to orchestrating a massive, nearly decadelong deception involving the emissions of its so-called “clean diesel” cars.

The facts are staggering: Volkswagen has confirmed that upward of 11 million vehicles worldwide were deliberately programmed to falsify their output of harmful pollutants under official test conditions.

Marta Tellado
Courtesy of Consumer Reports
Marta Tellado

While many of these models were aggressively marketed as representing the perfect marriage of high performance and environmental responsibility, Volkswagen’s customers are waking up to the news that they have been callously cheated on by the company they once trusted.

Let’s be clear – not every violation of consumers’ rights is perfectly black and white, but this one clearly is. The emissions manipulation was intentional. The advertising was false. The scope of the fraud was profound.

In the face of this calculated betrayal, consumers are left with their outrage, their hardship and their questions. How can I be compensated for the loss in my car’s value? How can I continue to drive a vehicle that may be 40 times dirtier than I believed it to be? And, most importantly, what action – what genuine action – is going to be taken to ensure that Volkswagen is held responsible and that this never happens again?

You couldn’t blame consumers for not expecting much in the way of recompense or accountability. After all, you barely need to look back more than a few days to see the kid gloves with which automakers have been treated in response to brazen misconduct. Last week, the Justice Department reached a settlement with GM in the paltry amount of $900 million – less than one-third of the company’s 2014 net profits – to settle criminal charges stemming from the faulty ignition switches that led to the deaths of at least 124 people.

When heinous breaches of trust are met with weak redress, two messages ring out loud and clear. Corporate executives get the message that, if their products defraud, kill, or financially hamstring consumers, they need not fear serious consequences. Meanwhile, consumers get the message that, once again, their safety and security – to say nothing of their principles or their voices – carry little weight in the marketplace.

03:41 - Source: CNN
Nardelli: Volkwagen knew it was violating emissions rules

In the weeks and months to come, Volkswagen will be held accountable for its deception; the company, and the officials who perpetrated this fraud, will face consequences. But whether those consequences will be meaningful, and whether they will truly bring justice to those hurt by their actions, remains an open question.

Consumer advocates need to work zealously to ensure that the actions taken in response to this betrayal are significant enough to right the wrong that was committed. We need to make certain that the consequences for deceiving the public are severe, and that they bring justice to those who have been harmed. We need to ensure that the voice of the consumer is heard over the din of half measures, trivial gestures and tired corporate apologies.

Rectifying this will require a financial solution: In addition to significant penalties, the company must pay for the false advertising it used to sell vehicles, and consumers hoodwinked by Volkswagen must be compensated for their losses, including the value of their car and future costs.

It will require an environmental solution: The company must bring all of its vehicles into compliance with emissions standards, take compelling steps to repair the very real damage that’s been done, and make a sizable, long-term commitment to reducing emissions at the industry level.

It will require a mechanical solution: Consumers’ vehicles must perform to the standards Volkswagen initially promised, or consumers must be otherwise compensated appropriately. In addition, of course, the company must commit to cooperating fully with all independent investigations, verifications, and tests.

But what of the ethical solution? For consumers who did their homework, who sought out the best value, who took a responsible stance, and who ultimately made a choice to go with Volkswagen, the wound cannot easily be healed. And while company officials have already begun to sing their predictable, dissonant chorus – broadly promising to “win back the trust” of their customers – it’s the voices of consumers that ought to be heard now.

The organization I lead, Consumer Reports, will be among those on the front lines working rigorously to lift those consumer voices as the world’s response is forged in the days ahead. For Volkswagen – which, in its very name, has sold itself as “the people’s car” – it is emphatically now the people who must be listened to and answered.

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