Lemon laws exist to keep vehicle manufacturers in line. Manufacturers provide warranties stating their vehicles will work correctly and that they will fix them if they don’t. When they fail to uphold their end of the bargain, lemon laws make sure consumers get compensated.
Sadly, more consumers than you may expect end up relying on these laws. The National Highway Traffic Safety Administration (NHTSA) estimates American car consumers purchase roughly 150,000 vehicles each year containing repeating, unfixable defects. These defective vehicles, colloquially known as “lemons,” cost consumers not just hundreds (if not thousands) in lost wages, alternative transportation costs, repair costs, tow fees and other costs, but also the peace of mind traditionally associated with buying a brand new car.
Every vehicle manufacturer has built and sold lemons. Ford, Toyota, General Motors, Volkswagen and more have all sold lemons. The material causes of lemons – substandard building stock, manufacturing errors, design flaws, problems during shipping – can vary. What stays the same is that the manufacturer is responsible for making things right. When a manufacturer drags their feet in doing so, lemon laws provide the consumer the tools they need to compel them to do the right thing.
Manufacturer’s warranties protect consumers from what lemon laws term “nonconformities.” Nonconformity is another term for “defect” because it throws the vehicle “out of conformity” with its written warranty. Nonconformities range from minor problems (unpleasant smells, unidentifiable rattles, radio problems) to major issues (brake failure, engines that won’t start or stop unexpectedly, safety systems that fail to protect occupants). Whether it’s a major or minor problem, any repeated and unfixable problem throws the vehicle out of conformity with its warranty. Even comparatively small issues can affect a vehicle’s resale value, which also negatively affects the consumer.
For more information on arbitration and other frequently asked lemon law questions, click here.
Manufacturers can do one simple thing to stay on the right side of the lemon law: not sell defective vehicles. Barring that, when they do sell a defective vehicle, they must make the consumer whole. The first step is usually attempting to repair the problem. If they can’t they offer one of two options: repurchase or replacement.
Repurchase, sometimes better known as “buyback,” is exactly how it sounds: the manufacturer buys the vehicle back from the consumer. The manufacturer pays the sticker price for the car plus sales taxes, title registration and other fees. Most state laws also require the manufacturer reimburse you for incidental costs you encountered because of the vehicle’s defects, including rental car fees, towing costs, phone or mail communications made when contacting the dealership or manufacturer, personal property damage, attorney’s fees if the consumer hires an attorney after learning the manufacturer has also hired an attorney, and even room and board if the vehicle fails while on an out-of-town trip.
One caveat in repurchasing, however, is the manufacturer can withhold a certain amount from the repurchase price depending on how many miles the vehicle was driven before the defect was reported. The manufacturer calculates how much you drove the defective vehicle, and withholds a “reasonable allowance” for your use of the vehicle. This is why you should always promptly report any suspected defect as soon as possible, to maximize the amount of money you get back.
Image Source : https://pxhere.com/en/photo/877541
The other option is replacement, in which the manufacturer replaces your defective vehicle with one just like your old one – though hopefully without the same defect. Specifically, the manufacturer must provide a “comparable” vehicle of the same make and model as the defective one. Just as with repurchase, state lemon laws allow the manufacturer to withhold a reasonable allowance for your use of the vehicle.
Lemon laws vary throughout the United States, with each state having different variances in their state’s lemon law; these differences include how long you have to report a defect, how many times you must let the manufacturer attempt repair, and other variables. However, the federal lemon law covers all American consumers equally. The federal law, the The Magnuson-Moss Warranty Act of 1975 protects all consumers in the United States regardless of their home state. It covers any product sold with a warranty, including automobiles.
Magnuson-Moss came about in response to alleged consumer rights violations by businesses in the 20th century. Throughout the 19th and early 20th centuries America’s main consumer law was caveat emptor: let the buyer beware. The consumer was on their own when making purchases. However, as the economy grew more complex and the gulf between consumer and manufacturer widened, Americans demanded a new standard of legal protection.
The Uniform Commercial Code (UCC) originally tried harmonizing sales and commercial transaction laws across America. States can adopt the code into their statutes either fully or partially, even though the Code itself is not law. Every U.S. state but Louisiana adopted UCC rules, who instead opted to keep their own civil law traditions.
Lemon laws are confusing. Read our guide to the lemon law complaint process.
This didn’t go far enough in stemming manufacturer abuses, and as such consumers demanded change from their elected officials. They wanted government oversight for warranty law and legal support when they take manufacturers to court. The Magnuson-Moss Warranty Act provides consumers and their attorneys the tools and support they need.
The Magnuson-Moss Warranty Act makes manufacturers designate any warranties they offer as either “full” or “limited” and specify exactly what they cover in a single, clear, easy-to-read document. They must also make the warranty conspicuously available for consumer review, allowing consumers to shop for warranty coverage before making a purchase.
The Act also prohibits these companies from disclaiming or modifying implied warranties with their written ones. This means consumers are always entitled to the basic protections of “implied warranties of merchantability;” that a good sold must do what that good is supposed to. For example: a new car should operate and convey passengers and cargo from one place to another safely. A car that cannot do this does not conform to the implied warranty of merchantability.
The Act helps consumers sue for breach of warranty not only by making it a violation of federal law, but also by lowering the amount of economic damages needed for a case to enter federal jurisdiction.
The Act also, however, allows companies to require consumers first undergo arbitration, otherwise known as “informal dispute settlement procedures,” before filing a breach of warranty claim.
Lemon law attorney Andrew Ross with Allen Stewart P.C. said arbitration rarely works out in favor of the consumer. Arbitration usually ends in a single day inside a conference room and not a courthouse, but often the “best case scenario” still ends relatively poorly for the consumer. Ross said the manufacturer often sends an engineer who is advised by a lawyer “behind the scenes.”
“It’s been my experience that those arbitrations are a waste of time,” Ross said. “Rarely does the [Better Business Bureau] render a decision that satisfies the consumer.”
He said the best consumers can usually hope for in arbitration is a buyback, but there’s no guarantee that goes smoothly for the consumer.
“When they award a buyback, they don’t tell you what the figures are,” he said. “First you must accept the decision, and then they’ll tell you what the figures are. It’s a bad situation for the consumer.”
Ross said 90 percent of lemon law claims never go to court, as even the manufacturer would prefer a speedy end to the situation. He said manufacturer almost always offer a settlement in lieu of going to trial; your attorney will work with you to determine whether the settlement is acceptable.
Ross said the time between signing on to represent the client and the client’s case resolving is generally 19 weeks.
When it comes to lemon law claims, time is always of the essence. The faster you report any defect, the better off your chances are of getting a positive outcome. The sooner you reach out to Allen Stewart P.C., the better. The lemon law attorneys of Allen Stewart P.C. have the tools and experience needed to guide your lemon law claim to success. Contact Allen Stewart P.C. today.