U.S. FTC sues Volkswagen over diesel advertising claims

By David Shepardson

WASHINGTON (Reuters) - The U.S. Federal Trade Commission on Tuesday sued Volkswagen Group of America, saying the U.S. arm of the German automaker falsely advertised more than a half million diesel vehicles as environmentally friendly when it knew they were emitting excess pollution.

The FTC filed suit against the wholly owned Volkswagen AG unit in U.S. District Court in San Francisco. The agency said U.S. consumers suffered "billions of dollars in injury" as a result of deception by VW, which has admitted to using software that allowed 580,000 diesel vehicles built since 2009 to emit up to 40 times legally allowable pollution.

In January, the U.S. Justice Department sued VW for up to $46 billion for violating environmental laws. VW also faces more than 500 civil lawsuits related to excess emissions, along with suits from some U.S. states. Last week, a federal judge set an April 21 deadline for VW to come up with a concrete remedy for the vehicles.

U.S. Senator Bill Nelson, a Florida Democrat, praised the FTC suit.

"This was one of the most egregious examples of a company deceiving the public," Nelson said. "Hopefully, the court will provide adequate redress to consumers and send a strong message that this type of corporate behavior won't be tolerated."

VW spokeswoman Jeannine Ginivan said the automaker has received the FTC complaint and "continues to cooperate" with all U.S. regulators. "Our most important priority is to find a solution to the diesel emissions matter," Ginivan said.

VW has an ongoing internal investigation to determine who at the automaker knew of the diesel cheating.

The FTC is seeking a court order requiring Volkswagen to compensate U.S. consumers who bought polluting vehicles and an injunction to prevent future similar conduct by Volkswagen.

The FTC said VW's claims "that the cars were low-emission, environmentally friendly, met emissions standards and would maintain a high resale value" were false. It said the vehicles involved sold for an average price of approximately $28,000.

The FTC said VW promoted its "clean" cars through a marketing campaign that cost tens of millions of dollars including Super Bowl ads, online social media campaigns and print advertising, "often targeting environmentally conscious" consumers."

VW remains in talks with the U.S. Environmental Protection Agency, California Air Resources Board and Justice Department over terms of a settlement. U.S. District Judge Charles Breyer and lawyers for the government and VW said last Thursday the sides had made "substantial progress" toward a settlement.

A settlement could include vehicle buybacks and cash incentives for repairs, along with environmental funds to address excess emissions. A point of contention is whether California and the EPA will accept a remedy addressing only part of the excess emissions.

(Reporting by David Shepardson; Editing by Chizu Nomiyama, Dan Grebler and David Gregorio)