Volkswagen has unjustifiably repossessed cars from customers who were behind on their car loan payments, with over 110,000 motorists potentially affected.
Volkswagen, already facing massive financial challenges with a debt of $448 million, has now been hit with a substantial fine in England.
The company's English importer has been criticized for taking overly harsh measures against customers behind on payments and loan installments.
The issue specifically involves Volkswagen's subsidiary, Volkswagen Financial Services, which has been fined $6.78 million and ordered to pay $25.48 million in compensation to the 110,000 affected customers.
This was reported by The Independent.
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The Financial Conduct Authority (FCA), which oversees businesses in the UK, decided to penalize Volkswagen Financial Services for their handling of customers between 2017 and 2023.
According to the FCA, the company failed to adequately consider the financial vulnerability of some customers, and in certain cases, repossessed cars that were essential for daily life, such as commuting to work.
The customers targeted by Volkswagen were primarily those who had fallen behind on their car loan payments.
“Volkswagen Financial Services made difficult personal situations even worse by not considering what customers might have needed,” said Therese Chambers, CEO of the FCA.
The lack of flexibility in handling customer cases is the main reason the FCA imposed the large fine on Volkswagen Financial Services in the UK.
A significant part of the problem was that Volkswagen Financial Services used automated systems to manage customer communications. These systems followed rigid templates, failing to take individual circumstances into account. As a result, many customers did not receive the necessary support and were met with strict demands, worsening their financial situations.
Volkswagen Financial Services has acknowledged these mistakes and agreed to compensate affected customers.
“We recognize our shortcomings in these past cases and have made significant changes over the past few years to ensure we provide the appropriate level of service,” a VW spokesperson said.
