Volkswagen Reaches $157M ‘Dieselgate’ Settlement; Gets Approval To Sell Diesels Again

Volkswagen is inching closer to putting its “Dieselgate” scandal in the rearview mirror. The automaker has agreed to a $157 million settlement that will end lawsuits in 10 states, and it has been cleared to start selling diesels in the U.S. again.

Volkswagen announced Thursday that it had reached an agreement [PDF] with the attorneys general of 10 states to resolve additional environmental and consumer claims over its use of so-called “defeat devices” to skirt federal emissions standards.

The $157 million settlement will be split between Connecticut, Delaware, Massachusetts, Maine, New York, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington and used to offset the environmental impact of the excess emissions.

Each of the states in the settlement are what is referred to as “Section 177 States.” This means they have all incorporated into their state law more stringent auto emissions standards established by California under the Clean Air Act.

By reaching the agreement, VW says it “avoids further prolonged and costly litigation as Volkswagen continues to work to earn back the trust of its customers, regulators and the public.”

New York Attorney General Eric Schneiderman, who accused VW of committing fraud in a July 2106 lawsuit, says his state will receive $32.5 million as a result of the settlement.

“Volkswagen, Audi and Porsche tried to pull off an extraordinarily cynical corporate fraud – deceiving hundreds of thousands of consumers, pumping thousands of tons of harmful pollution into our air, and flouting New York and federal environmental laws designed to protect public health,” Attorney General Schneiderman said in a statement. “Now, this state environmental penalty makes clear that no company – however large or powerful – is above the law in New York.”

The agreement is in addition to VW’s previous 44-state settlement reached last year to resolve state consumer protection claims. However, the company notes that settlement did not include claims for injunctive relief or restitution related to 3.0L TDI V6 vehicles, which are included in the settlement announced today.

In other VW “Dieselgate” news, Bloomberg reports that the car maker announced that nearly two years after it stopped selling diesel-engine vehicles in the U.S. it has received approval from the Environmental Protection Agency to allow dealers to offer for sale model year 2015 vehicles with approved emission modifications.

A spokesperson for VW tells Bloomberg the company is still finalizing the details of the program.

For now, the sales will apply only to the approximately 12,000 vehicles in dealer stock. The spokesperson tells Bloomberg that eventually sales will include used 2015 diesels that have been bought back by the carmaker as part of its settlement with U.S. regulators.

VW issued a stop sale on the vehicles in Sept. 2015, just days after the company’s use of so-called “defeat devices” to skirt federal emissions standards came to light.

The emissions software update was actually approved in January when the EPA and the California Air Resources Board said VW had provided an adequate fix for 70,000 2-liter Volkswagen vehicles that release up to 40-times the allowable rate of nitrogen oxide.

The remedy, which is to take place in two phases over the next year, applied to model year 2015 Volkswagen Beetle, Beetle Convertible, Golf, Golf SportWagen, Jetta, and Passat, and the model year 2015 diesel Audi A3.

The first phase, available now, will remove the defeat device software and replace it with software that directs the emission controls to function effectively in all typical vehicle operation, the EPA says.

The second phase, which will take place next year, involves VW installing additional software updates and hardware, including a diesel particulate filter, diesel oxidation catalyst, and NOx catalyst — all of which are needed to maintain vehicle reliability and emissions performance over time.

Amazon Wants Frustration-Free Packaging For Cereal, Cookies

Packaged food companies spend gobs of cash designing boxes and bags to catch supermarket shoppers’ eyes, but what’s the point of that flashy design when you’re shopping online? Amazon is hoping that companies like Mondelez and General Mills will agree to optimize packaging for shipping instead of shelf appeal.

Amazon has been offering “frustration-free” packaging for a wide array of electronics since 2008 — doing away with many of the packaging features that are primarily intended to prevent shoplifting and tampering. Those often-annoying safeguards are pointless for most things purchased online.

Amazon, which is so anxious to expand its grocery sales that it’s even opening brick-and-mortar stores, has invited big companies that sell consumer packaged goods to rethink their packaging in similar ways.

Instead of investing in packaging that makes products stand out on a shelf, companies could instead invest in making their packaging sturdier and better able to survive shipment. The three-day meeting even includes a visit to an Amazon fulfillment center.

Bloomberg News has a copy of the invitation, which explains that the event is meant to make companies rethink their supply chains. “Amazon strongly believes that supply chains designed to serve the direct-to-consumer business have the power to bring improved customer experiences and global efficiency.”

There’s an implied threat here, too. People love shopping on Amazon, especially getting their orders delivered in just a few hours or a few days. The company keeps expanding its private-label products for everything from electric cords to food products and diapers. If packaged goods suppliers don’t want to play along, Amazon can push its own brands on the shoppers that are already on its site.

Student Loan Debt Collectors Not Eager To Charge Fees Reinstated By Trump Administration

The Department of Education recently advised companies that collect debt on billions of dollars in outstanding federal student loans that they can once again charge a large penalty fee to defaulted borrowers. However, the collectors — even one that is currently suing the government for the right to charge this fee — now say they will not automatically add thousands of dollars in additional debt to loans in default. 

Bloomberg reports that all 26 loan companies that collect for the Federal Family Education Loan (FFEL) program have said they will not automatically charge borrowers a higher default fee, even though they totally could.

Last week, the Department of Education advised [PDF] federal student loan debt collectors that they were now allowed to automatically charge borrowers a default fee that is equivalent to 16% of the loan balance.

The guarantors were told to ignore a July 2015 Obama administration guidance [PDF] that restricted fees on the public-private FFEL Program loans. That 2015 directive barred guarantors from charging default penalty fees on borrowers who met the following conditions: They responded to the notice of default within 60 days, entered into a repayment and rehabilitation program, and then abided by that program.

With about 7 million borrowers still owing $162 billion in debt for outstanding FFEL loans, the guarantors would likely see a nice windfall from the higher fees.

However, Bloomberg reports that might not be the case, as all of the guaranty agencies have announced in the last week that they won’t be charging higher fees.

“Many student loan borrowers already have a difficult time managing their loan obligations,” James Patterson, chief executive officer of the Texas guaranty agency, tells Bloomberg. “Adding more fees does not help their situation.”

The decision not to charge higher fees comes as a bit of a surprise, as one guaranty agency — USA Funds — waged a rather public battle against the 2015 directive capping the fees.

In fact, USA Funds sued the Department [PDF], alleging that the guidance was inconsistent with the law, and that then Secretary of Education Arne Duncan sidestepped the required rulemaking process by issuing this rule without seeking public comment.

As we reported last week, that lawsuit is still pending in federal court, but recent filings indicate that the government is actively looking to walk away from the dispute.

USA Funds also faced additional scrutiny because of a family connection to the Department of Education. Taylor Hansen, son of USA Funds CEO Bill Hansen, was a high-ranking adviser to Ed. Secy. Betsy DeVos at the time this new guidance was issued. However, amid concerns about improper influence, Hansen quietly stepped down from government gig after only a few weeks on the job.

McDonald’s Plans To Offer Fresh Beef Burgers In Most Locations Next Year

In pockets of stores throughout Texas and Oklahoma, McDonald’s has been replacing its frozen beef patties with fresh meat for about a year. Now the fast food goliath says a majority of its stores nationwide will be serving up the non-frozen patties by mid-2018.

McDonald’s has faced increasing competition not just from its fellow national burger chains, but from smaller regional operators like Five Guys, Whataburger, and others, who offer fresher ingredients.

Despite McDonald’s being arguably the most famous name in burgers, its reputation with consumers is also sagging. The chain has repeatedly come in last on the American Customer Satisfaction Index of limited service restaurants, and its burgers have previously been named the least tasty of all fast food chains.

McDonald’s began testing the fresh beef patties last spring at 75 stores in the Dallas area, before expanding a few months later to some markets in Oklahoma. The company recently added more than 300 locations in North Texas to that test.

“We received overwhelmingly positive feedback from customers and employees and we’re proud to have been part of a test that is creating a watershed moment for McDonald’s,” said one Dallas-area McDonald’s franchisee in a statement released by the company. “This test was driven by the Franchisees, our region and insights from what our customers are asking for when they visit McDonald’s.”

The change to fresh beef will involve the patty used for the Quarter Pounder and its related burgers, like the Quarter Pounder with Cheese, Double Quarter Pounder with Cheese, the Quarter Pounder with Cheese Deluxe and Signature Crafted Recipe burgers. We’ve asked McDonald’s to clarify what, if any, effect this change will have on the Big Mac; we’ll update if we receive a response.

Moving away from frozen patties can result in better burgers, but it can also increase food storage/waste costs for some franchisees if those fresh beef burgers aren’t going out the window at a rapid rate. The chain’s promise to cook burgers when ordered may also slow down service, potentially aggravating customers who choose McDonald’s for expedience over taste.

Carl’s Jr. Is Replacing Bikinis With Burgers In New Ad Campaign

For Carl’s Jr., selling food has long meant selling sex, with ads featuring women in skimpy bikinis and cutoff shorts chowing down on juicy burgers. The chain has decided to go with a more direct approach, and will now focus on using actual burgers to sell burgers. What a novel idea.

In a new tongue-in-cheek commercial, the fictional Carl Hardee Sr. is sick of his son Carl Jr. running the place like a millennial frat boy on eternal spring break and using sex appeal to get customers interested in their food.

Carl the elder promptly gets down to business at company headquarters, literally tearing down his son’s legacy by pulling pictures of busty women holding burgers off the wall — actual real-life advertising the chain used in the past — and replacing them with framed beauty shots of burgers.

He goes on to wax poetic about the ways the company pioneered the “great American burger” while his son insists that his focus has always been “on food not boobs.”

AdWeek reports that Carl Sr. will be the new face of both of his eponymous chains — Carl’s Jr. and sibling Hardee’s — for at least the rest of the year, spouting the tagline: “Pioneers of the great American burger.”

In case you need a refresher course in previous Carl’s ads, see below (though maybe not if you’re at work):

American Airlines Co-Pilot Dies After Medical Emergency During Landing

The co-pilot of an America Airlines flight from Dallas-Fort Worth to Albuquerque experienced a medical issue during landing and died shortly after reaching the gate.

CNN reports that the co-pilot of American flight 1353 became incapacitated just miles before the plane was to begin its final descent to Albuquerque’s Sunport Airport around 3:30 p.m.

A spokesperson for the Federal Aviation Administration said the captain of the plane declared an emergency and completed landing safely.

Once the plane landed, it taxied to the gate and was met by paramedics, who performed CPR for 35 to 40 minutes, sources close to the matter tell CNN, adding that the co-pilot was pronounced dead a short time later.

American said in a statement that it was “deeply saddened” by the co-pilot’s death, and asked for “thoughts and prayers” for his family and colleagues.

The FAA spokesperson notes that the agency will work with the airline to learn more about the incident.

Bank Of America Ordered To Pay $46M Over Improper Foreclosure

Bank of America must pay $46 million for improperly foreclosing on a California couple’s home in 2010. 

U.S. Bankruptcy Court Judge Christopher Klein levied [PDF] the judgement against the bank this week, calling Bank of America’s actions in foreclosing on the couple’s home “heartless” and “brazen.”

In all, Klein ordered the bank to pay $46 million, most of which will be divvied up by law schools and consumer advocate agencies, with the couple receiving about $1 million.

Klein noted in the 107-page ruling that the fine should be enough to spur change with the bank’s mortgage practices, and not be seen as “petty cash or chump change.”

“It is apparent that the engine of Bank of America’s problem in this case is one of corporate culture… not rogue employees betraying an upstanding employer,” Klein added.

The California couple’s problems began in 2008 when they bought a less expensive house in Sacramento than they currently owned.

The couple’s mortgage — $590,000 — was borrowed from a bank that was eventually taken over by Bank of America.

Loan officials had promised the couple they would be able to request lower monthly payments. However, in 2009, Bank of America officials told the couple they could only receive a loan modification if they had missed payments.

“Their sole reason for defaulting, which they did with considerable reluctance was acquiesce in Bank of America’s demand that they default as a precondition for loan modification,” the option states.

After that, “Bank of America started a multi-year ‘dual-tracking’ game of cat-and-mouse,” the ruling states. “With one paw, Bank of America batted the debtors between about 20 loan modification requests or supplements that routinely were either ‘lost’ or declared insufficient, or incomplete.”

By 2010, the couple had filed for bankruptcy, a process that halts foreclosure sales. However, Bank of America improperly took possession of the home, giving the couple a three-day notice.

While the bank later reversed the decision and the couple moved back in, when the couple re-entered the premises, they discovered that major appliances, window coverings, and carpet had been removed.

Additionally, the homeowner’s association had fined the pair $20,000 for dead shrubbery and landscaping.

While the couple was acting in good faith throughout the ordeal — despite medical issues and other expense — Klein found that Bank of America had no intention of acting in good faith.

In a statement to the Wall Street Journal, a rep for Bank of America said the findings were “unprecedented and unsupported,” adding the foreclosure processes have changed since 2010.