Nowadays, every country has a different legal system. However, we make up for this “independence” with intrinsically connected economies, where buying the same products from the same companies in different corners of the world is possible. What happens when something goes wrong in a globalised company? When a company commits a fraud -such a small thing like offering accurinate information can have huge consequences in a globalized company-, then it is the consumer who must deal with said issue within the existing legislative framework in his/her home country. Yet, is it fair that the treatment of a problem, along with the compensation it demands, depends on the home country of the individuals affected in despite the fact that all consumers, regardless of their geographical location, are affected on the same level?
One significant example to illustrate the above problem is the Volkswagen (VW) emission scandal. A great commotion followed the release of the tests executed by the Environmental Protection Agency (EPA) conducted on different VW cars on 18 September 2015.
VW cars were equipped with a sensor that could detect if they were being driven under test conditions, it was only during these driving tests that the cars would emit the permitted amount of nitrogen oxide (NOx). During regular driving, this sensor would not kick in, and the NOx emission level for 2.0 liters vehicles was found to be 10 to 40 times higher than the required emission standards, while the emission level for 3.0 liters’ vehicles was found to be 9 times higher. Based on the federal pollution standards, the affected vehicles in the USA would have emitted only 1,000 tons of NOx per year. However, they were found to emit between 10,400 and 41,500 tons of NOx per year instead (based on typical annual mileage counts). This means that the cars could have saved fuel, which is needed for the nitrogen oxide trap. This nitrogen oxide trap does not allow more than a certain number of pollutants to pass through it, thereby reducing toxic emissions.
Overall, this scandal affected about 500,000 cars alone in the USA, and over 11 million cars worldwide. Ironically, VW had recently prided itself on producing cars with low NOx emissions in a huge marketing campaign.
High emissions of NOx can result in severe health consequences. They can cause an inflammation of the airways, which decreases the lung functioning and increases response to allergens. There are also long term impacts on the environment, such as the production of photochemical smog, acid rain and nitrate particulates; and contributing to the destruction of stratospheric ozone layer.
The VW fraud has affected many human beings as well as our vulnerable environment. Regardless of whether the cars were bought in the EU, Africa or the USA, the impact of this fraud is as globalised as our economy is. Nevertheless, on the grounds of the different legislations in each nation, people directly affected by this scam have been compensated unequally.
In the USA, VW rebought the affected cars. Buybacks ranged in value from $12,500 to $44,000, the repurchase terms varying according to restitution payments and mileage. Individuals with confirmation by the Environmental Protection Agency about their emission received payouts ranging from $5,100 to $10,000. Volkswagen also paid $2.7 billion for environmental mitigation and another $2 billion for clean-emissions infrastructure.
In contrast, the EU allowed the car industry an extra year before VW had to comply with the newer regulation. Furthermore, by then, the new “realistic” EU driving emissions test will allow cars to emit more than twice the legal limit of NOx from 2019 and up to 50% more from 2021. This is considered a great victory for the car industry and a defeat for the fight against car pollution.
On the other hand, hope still remains as nations worldwide have spent billions of euros on financing eco-friendly cars -the Netherlands being an example of this behaviour. Countries, such as Spain and Norway, have conducted criminal investigations into possible economic transgressions committed by VW. These show how some countries are attempting to do their part in righting a globalised wrong done by this particular fraud.
All in all, there are have been different reactions to the fraud: while VW has rebought the affected cars of people who purchased them in the USA, those in Germany have to resort to going to car dealers who will update a new program on the manipulated software of their cars. However, we ask ourselves, how fair is this system of compensations based on country of residence?
Germany and the USA have different emphasis in their environmental rules regarding the restriction of car pollutions. Germany focuses on rules which regulate the air pollution by restricting gases like CO and CO2, as well as limiting its dependency on oil and greenhouse gases by decreasing the use of fuel. On the other hand, the USA focuses on reducing air pollution, to prevent smog and health problems, by regulating NOx and PM.
Additionally, people in the USA have the right to file a class action. This is a lawsuit where a group, which represents all the purchasers of a certain product, can sue the other party (i.e. VW). Hence, the decision of the court will apply to every single member of this group. The chances of winning with a group are much higher, and the risk of losing and paying for the whole trial is much lower. Contrarily, in Germany, and many other EU states for that matter, the people do not have the right to file a class action. Every single plaintiff must prove his/her own case. That is to say, the danger of VW losing a trial in the USA is much higher than in Germany.
“In my opinion, there should be some universal rules which apply to everyone who is duped by a company that sells its products worldwide. It is not fair for a car owner in the EU to get nothing back as a reimbursement. I understand that it is nearly impossible for VW to rebuy every single affected car as in the USA, but providing the same treatment to all its customers is very important to ensure that certain standards are met in this highly globalised world. Additionally, I think that the reactions of the EU are ridiculous. They should not find a compromise with the car industry and allow for so much pollution to occur. The rules and regulations should be fixed, no matter the country. The goal of the EU should be consumer protection, not making deals with the car industry. Hopefully, there will be a fixed set of international consumer protection standards to keep mega car companies in check, while at the same time protecting all international buyers who have fallen victim to auto dealer frauds, should a scandal like this occur in the future.”