This is definitely a factory defect. I was at the dealer today and have a good relationship with them. I casually mentioned it to the service manager who was setting my car up for some recall work hinting that we could also use a recall on the paint problem and he just said. "Yeah, a lot of upset people out there on that issue." He basically admitted it was VW's fault. I have seen complaints on it on other chats also.

FIX: have a touch up shop paint over the buttons after stripping away the old paint. I pulled the paint off my radio buttons with sticky tape and then with a dentist's pick. They are now all white but glow red when the lights are on. Either finger nail polish or "bumper cover" or other type paint would do it. Delicate touch painting it though. The service manager mentioned that a touch up shop had done a great job on one guy's buttons with the radio still in the car. Not sure how I might try it but if I go to sell the car I need to do something. Buy a new radio?

OR: Wait for the recall. Impossibly expensive for VW. Quite possible they will never do it.

Okay, so I have a 06 passat and the buttons on the radio are bubbling up. Also, some of the bubbling pieces have popped and I have tried dotting it in with a black mark. Turns out, it only got worse. I wonder it's bubbling up because of the hot weather here. Sorry I couldn't show any pictures of it. It's in the shop right now getting fixed with a bunch of other problems. You are a great company Volkswagen, but you do a terrible job at making rather all your cars, or your 06 and all other Passats!