In September 2015, the Environmental Protection Agency (EPA) found that many Volkswagen cars being sold in America had a "defeat device" - or software - in diesel engines that could detect when they were being tested, changing the performance accordingly to improve results.
The German car giant has since admitted cheating emissions tests in the US and will be paying $10.2 billion in settlement.
There is some background information on the emission scandal on BBC and Wikipedia
Most of the money would go to compensate 482,000 owners of cars with 2-liter diesel engines that were programmed to turn on emissions controls during lab tests and turn them off while on the road, said the people, who asked not to be identified because a judge has issued a gag order in the case.
Owners would have a choice between selling their vehicles back to VW at the value before the scandal broke on Sept. 18, 2015, or keeping the cars and letting the company repair them. Either way, they would also get $1,000 to $7,000 depending on their cars' age, with an average payment of $5,000, one of the people said.