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III. Consumer Experience
As reflected in the above performance metrics, Volkswagen administered the Claims
Program effectively over the course of the quarter with most eligible consumers proceeding
through the process without issue. This section provides updates pertaining to certain key
components of the Claims Program and an analysis of the company’s performance in delivering
customer support.
A. Claims Program Updates
1. Non-Standard Claims
a) Branded Title Claims
As set forth in previous reports dating back to June 2017, the Parties have been working
with the court-appointed CRC to address how the eligibility requirements in the Class Action
Settlement Agreement apply to certain consumers who submitted claims involving vehicles they
acquired with a branded title sometime after September 18, 2015 -- the date the EPA issued its
first notice of violation after discovering the existence of defeat devices.34
Following the first notice of violation, a limited number of consumers acquired vehicle
models that were part of the notice of violation -- often at insurance auctions after the vehicles
had been totaled in an accident. Indeed, of the 2,140 claims submitted by consumers who had
acquired vehicles with a title that previously had been branded sometime after September 18,
2015, a total of 1,415 of these claims (66.1%) were submitted by 267 consumers. Additionally,
34 Title brands include salvage, rebuilt, reconstructed, and prior salvage, and indicate, among other things, whether a
vehicle has sustained damage or may be unsafe to drive. A vehicle branded with a salvage title is typically one that
was damaged to the point that it was declared a total loss by an insurance company, often because the cost to repair
the vehicle was greater than the value of the vehicle in its damaged state. Generally, a vehicle with a salvage title
cannot be registered with a state department of motor vehicles. However, the nomenclature related to title brands
varies from state to state and will be analyzed accordingly, so that the eligibility requirements are consistently
applied.
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the same 267 consumers submitted 72.2% of the 1,959 claims involving vehicles with branded
titles that were acquired following the Court’s approval of the Class Action Settlement
Agreement on July 26, 2016. By undertaking repairs necessary to convert these vehicles back to
an operable state, the apparent intent of many of these consumers is to profit through
participation in the Claims Program. Some of these consumers have taken the position that,
because claims on these types of vehicles are not expressly excluded in the Class Action
Settlement Agreement, they should be deemed eligible.
The Class Action Settlement Agreement expressly excludes claims by consumers with a
vehicle that “had a Branded Title of Assembled, Dismantled, Flood, Junk, Rebuilt,
Reconstructed, or Salvage on September 18, 2015, and was acquired from a junkyard or salvage
yard after September 18, 2015.” It does not, however, expressly address circumstances
involving a vehicle with a title that was branded subsequent to September 18, 2015. The stated
goal of the Class Action Settlement Agreement “is to compensate owners or lessees of Eligible
Vehicles for any harm they suffered as a result of the emissions issues and to ensure that
Volkswagen’s 2.0-liter TDI vehicles do not generate excess NOx emissions.” Because some
consumers acquired the vehicles at issue with a branded title after discovery of the defeat device
became public, and many of the vehicles were out of commerce at the time they were acquired,
the Parties and the CRC undertook to further scrutinize whether their claims should be deemed
eligible.
Based on a holistic review of the Class Action Settlement Agreement in response to
consumer appeals, the CRC adopted a general framework for processing branded title claims,
which has been implemented by Volkswagen. The following is a non-exhaustive list of
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categories of branded title Buyback claims and the eligibility determinations that Volkswagen
anticipates reaching as to each, based on the CRC’s guidance:35
(i) Owners of vehicles that were branded on or before September 18, 2015, and were
acquired from a junk yard, salvage yard, or the equivalent (i.e., insurance auction)
with a branded title after September 18, 2015, will be deemed ineligible for
compensation.
(ii) Owners who acquired their vehicles prior to September 18, 2015, with a nonbranded
or salvage rebuilt title may be eligible for both Vehicle Value and Owner
Restitution if the vehicles currently have a branded title (including salvage and
salvage rebuilt titles), provided that all other eligibility requirements are met. If
the vehicle currently has a brand of junk, non-repairable, “parts only,” or any
equivalent brand denoting that the vehicle can never be rebuilt or repaired, the
vehicle is eligible only for Owner Restitution.
(iii) Owners of used vehicles that were purchased with a branded title and had a
“salvage rebuilt” or equivalent title as of February 26, 2018, are potentially
eligible for Vehicle Value if all other eligibility requirements are met. If the
previous owner of the vehicle does not submit a claim for Owner Restitution by
the September 1, 2018 claim filing deadline, the consumer also may be eligible to
receive Owner Restitution in addition to Vehicle Value.
(iv) Owners of used vehicles that were purchased with a salvage title and continue to
have a salvage title on or after February 26, 2018, are ineligible for compensation.
Once a vehicle has been deemed ineligible to participate in the Claims Program
35 Consumers with a branded title vehicle deemed to be eligible also will have the option of electing an AEM.
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due to the existence of a salvage title, no new claims submitted in connection with
the VIN will be accepted for processing.
The Parties recognize that some claims relating to vehicles with branded titles involve
unique factual circumstances. Due to these complexities, the Parties have advised the Claims
Supervisor that they will continue to work collaboratively with the CRC to address such claims
requiring more detailed analysis, so that determinations may be reached in conformity with the
letter and spirit of the Class Action Settlement Agreement. As with all eligibility determinations,
consumers may file an appeal from Volkswagen’s claims determinations with the CRC.
Following the CRC’s framework, Volkswagen has begun processing branded title claims
that were previously on hold, and has reached determinations in connection with twenty-four
such claims. Practically, the company is also providing notice to impacted consumers as their
claims are processed. Of the 3,392 related claims that have not yet been processed, 1,935 claims
are in the first ten-business-day review period, 1,199 claims are in the second ten-business-day
review period, and 258 claims are in various other stages of the claims review process.36 The
Claims Supervisor will continue to monitor the status of Volkswagen’s processing of claims
involving vehicles with branded titles, and will provide updates in future reports