The European Commission is understood to have found Volkswagen guilty of breaching the law in at least 20 countries, by fitting some of its vehicles with a software that allowed them to cheat emission tests.
According to sources within the commission cited by German daily Die Welt, the embattled carmaker was judged to have broken the Consumer Sales and Guarantees Directive, which forbids companies from touting exaggerated environmental claims in their sales pitches, and the Unfair Commercial Practices Directive.
Both sets of legislation apply to all the 28 countries across the European Union, the paper added, indicating that industry commissioner Elzbieta Bienkowska has repeatedly urged the Germany-based company to refund customers voluntarily.
Meanwhile, consumer commissioner Vera Jourova is said to have written to consumer associations across the 28-country bloc to ensure Volkswagen's clients looking for compensation will be treated fairly in each state.
In June, Volkswagen agreed to pay up to $15.3bn (£11.7bn) to buy back and fix cars fitted with a software that enables them to cheat emission tests, but the deal only covered 475,000 2.0-litre VW and Audi diesel vehicles.
The group, however, has so far resisted calls to compensate European customers who have been affected by the same issue, largely as different legal rules reduce the chance of winning a payout.
"It already appears that Volkswagen clearly breached European consumer laws in most member states," Jourova was quoted as saying by Die Welt.
"That is why I think it is necessary that we get involved to coordinate on a European level."
Last week, Australia's consumer watchdog began legal proceedings against Volkswagen over the diesel emissions scandal, claiming the German carmaker engaged in misleading or deceptive conduct, made false or misleading representations and engaged in conduct liable to mislead the public in relation to diesel vehicle emission claims.