FOR IMMEDIATE RELEASE: April 28, 1988 VOLKSWAGEN OF AMERICA TO SET UP OWNER ARBITRATION PROGRAM UNDER CONSENT ORDER WITH FEDERAL TRADE COMMISSION Volkswagen of America (VWOA) will set up an arbitration program for owners of certain Volkswagen and Audi automobiles with faulty valve seals and other oil consumption-related problems as part of a consent order with the Federal Trade Commission that has now been finalized. The program will be administered by the Council of Better Business Bureaus. The consent order with VWOA settles an FTC complaint charging that the company failed to disclose important information about potential repair problems to owners and prospective buyers. The costs of repairing oil consumption- related problems can range from approximately $125 to $2000. The arbitration program is available to current or former owners of 1974 to 1979 Volkswagen Rabbits, Dashers, and Sciroccos, and Audi 100LSs, Foxes, and 5000s, with water-cooled gasoline engines that have suffered oil consumption-related damage. VWOA will provide owners of the affected vehicles with special "Background Statements" approved by the FTC and describing the oil consumption problem to help them prepare their cases for arbitration. It is also available to current owners of any Volkswagen or Audi with any other internal engine component problem. Current and former owners who believe they are eligible should notify Volkswagen in writing at VWOA Inc., Customer Services Dept., 888 West Big Beaver, P.O. Box 3951, Troy, Michigan 48007-3951. Current and former owners may call these numbers toll-free: Volkswagen owners, 1-800-822-VWUS; Audi owners, 1-800-822-AUDI. Volkswagen will automatically notify any other consumer who has already written to the company or the FTC. Volkswagen must also inform all state attorneys general of this settlement, and request that they send the company complaints from VW and Audi owners. VWOA must notify all owners whose complaints are sent to the company by state or other local consumer protection agencies. The arbitration program also will cover prospectively any Volkswagen or Audi vehicle distributed by VWOA that has any internal engine component problem. Customers must still own the vehicles to be eligible for this program. Volkswagen must place advertisements in national magazines, distribute posters to its dealers, and add statements to its owner's manuals which disclose the availability of arbitration to owners. These notices will also highlight the fact that arbitration is available to remedy certain past oil consumption- related problems. Volkswagen must offer the arbitration to owners at no charge for at least two years. After two years, the company may charge owners for arbitration, but cannot exceed the charges specified in the BBB's Modified Rules for Arbitration. Currently the BBB does not charge auto owners for arbitration. (More) Under the consent order, Volkswagen also will make publicly available, for 1984 and later model cars, the product service bulletins it routinely sends to its dealers. In addition, it will also prepare easy-to-understand summaries of the more significant bulletins. Volkswagen will advertise the availability of service bulletins through new car window stickers, owner's manuals, brochures, and other printed promotional materials. Volkswagen of America is based in Troy, Mich., with more than one thousand dealerships nationwide. A consent agreement is for settlement purposes only and does not constitute admission of a violation of law. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $10,000. The Commission voted unanimously to accept the consent order. While concurring in the Commission decision, Chairman Daniel Oliver expressed some reservations about two aspects of the order. First, he characterized the prospective redress provisions of the order as "needlessly regulatory," saying "if Volkswagen wants to negotiate and resolve consumer complaints through a Better Business Bureau arbitration scheme, it should certainly be free to do so. However, active government supervision of such a scheme forces the government to maintain an active presence in the operation of a domestic auto seller for the next eight years." He also expressed concern about the fact that the prospective redress provisions will grant relief to consumers who were not injured by the alleged violations. "In future consent orders," Oliver said in a statement, "where consumer redress is warranted, I would prefer redress provisions that confer benefits on the injured parties." Chairman Oliver also would have preferred permitting Volkswagen to exclude consumer participants in two class action settlements filed in New York and California state courts from the oil consumption- related damage provisions of the Commission order. In the Chairman's view, those settlements already provide covered consumers with more than adequate redress for oil consumption- related damage. Copies of the complaint, consent order and Chairman Oliver's statement are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue N.W., Washington, D.C. 20580; 202-326-2222; TTY 202-326-2502. # # # MEDIA CONTACT: Duff Thomas, Office of Public Affairs, 202-326-2178 STAFF CONTACT: Robert M. Doyle, Bureau of Consumer Protection, 202-326-3114 CONSUMER INQUIRIES: 202-326-3546 (FTC Docket No. 9154) (VW)