Lemon Law Background
The term “Lemon-Law” is a nick name derived from other common terms such as “Lemon-Car”, “Monday-cars” and “Friday-Cars”.
A lemon car is a defective car that, when purchased new or used, is found by the purchaser to have numerous or severe defects not readily apparent before the purchase. Any vehicle with these issues can be termed a “lemon car” and by extension, any product which has major flaws that render it unfit for its
purpose can be described as a “lemon product”.
New vehicles directly from the factory may contain hidden mechanical flaws or defects in workmanship, usually caused by an error during the build process of the car. These errors can range from parts being installed incorrectly, a tool that was used to build the car not being removed, a batch of materials with structural or chemical flaws or simply bad design.
Usually, a car is labeled a lemon if the same problem occurs 3 times in a row over a short period, and previous attempts at repair have not repaired the problem. In most cases, if you get a lemon, lemon laws will make the company buy back the car or exchange it.
Many of you might remember that during the late eighties the average American consumer almost lost faith completely with the American made cars.
The amount of lemon cars along with the high rate of over the average visits to the car garages as well as the high repairs and spare parts cost, caused many Americans to switch to Japanese and even European cars.
This was a period of time when Americans were reluctant to go to the dealers garages and preferred to go to oil & lube services only.
At that time Lee Iacocca the CEO of Chrysler Corp identified immediately the problem of mistrust of American consumers in American made cars, Chrysler launched a campaign on national TV promising to provide a bumper-to-bumper warranty coverage for 50,000 miles or five years, which ever comes first! Then GM came with the answer of 60,000 miles or 6 years,
which ever comes first! Chrysler returned with the final stroke of 70,000 miles or 7 years which ever comes first.
Few months later I went to the Buick main dealer garage in long Island, I was seating in the waiting room, next to me was a very nervous guy, I asked him why was he so upset with the garage, he explained to me that even though he had this bumper-to-bumper warranty It doesn’t cover labor and the damn car is more than a week in the garage and they don’t seems to be able to find what is the problem with the car…
The Magnuson-Moss Warranty Act is Known as the “Lemon Law”
The Magnuson-Moss Warranty Act is a United States federal law codified at 15 USC 50. Enacted in 1975, it is the federal statute that governs warranties on consumer products.
The Act was sponsored by Senators Warren G. Magnuson of Washington and Frank Moss of Utah, both Democrats.
State Lemon Laws have some differences like coverage of motorcycles and used vehicles, but there are some basic guidelines that they do share. (See 50 state by state Lemon Law Summaries at: http://autopedia.com/html/HotLinks_Lemon2.html).
In passing the Magnuson-Moss Warranty Act, Congress specified a number of requirements that warrantors must meet. Congress also directed the FTC to adopt rules to cover other requirements.
The FTC adopted three Rules under the Act, the Rule on Disclosure of Written Consumer Product Warranty Terms and Conditions (the Disclosure Rule), the Rule on Pre-Sale Availability of Written Warranty Terms (the Pre-Sale Availability Rule), and the Rule on Informal Dispute Settlement Procedures (the Dispute Resolution Rule).
In addition, the FTC has issued an interpretive rule that clarifies certain terms and explains some of the provisions of the Act. This section summarizes all the requirements under the Act and the Rules.
The Act and the Rules establish three basic requirements that may apply to a warrantor or a seller.
A. As a warrantor, you must designate, or title, your written warranty as either “full” or “limited.”
B. As warrantor, you must state certain specified information about the coverage of your warranty in a single, clear and easy to read document.
C. As a warrantor or a seller, you must ensure that warranties are available where your warranted consumer products are sold so that consumers can read them before buying.
The laws define what a lemon car is and require that the manufacturer, not the dealer, takes care of the defects. If a number of attempts have been made to repair a defect that significantly impairs the use, value or safety of a car and the car continues to have this defect, the car is than considered to be a “lemon”.
Most statutes set up a warranty rights period of either 12 to 24 months or 12,000 to 24,000 miles. The defect(s) must occur sometime during this period.
Many of the state laws contain specific guidelines as to what constitutes a sufficient number of attempts to repair, and whether these attempts entitle the consumer to a refund or replacement. These are:
a. If the defect is a serious safety defect involving brakes and or steering, the manufacturer is granted one attempt to repair.
b. If there is a safety defect that is not considered a serious safety defect, the manufacturer has two attempts to repair.
c. For any other defect, the manufacturer is usually given three or four chances to repair the same defect.
d. If at any time the vehicle is in the shop for a cumulative total of 30 days in a one year period, with at least one of those days occurring the first 12,000 miles.
If any one of these of these guidelines can be satisfied, the consumer is usually given the right to require repurchase or replacement of his/her vehicle.
Most lemon laws do allow an offset for use of the vehicle by the consumer. Oftentimes, a reduction in the consumer’s purchase price return is used in relation to the number of miles he/she had put on the car. One law spells out the reduction in refund for use as follows:
(miles at time of refund X purchase price)/100,000
Only about one half of the lemon laws allow the consumer to recover attorney’s fees in his/her action. Those states that do allow attorney’s fees provide for a greater likelihood of success and representation in warranty disputes.
What the Magnuson-Moss Act - Lemon Law, Does Not Require
First, the Act does not require any business to provide a written warranty. The Act allows businesses to determine whether to warrant their products in writing. However, once a business decides to offer a written warranty on a consumer product, it must comply with the Act.
Second, the Act does not apply to oral warranties. Only written warranties are covered.
Third, the Act does not apply to warranties on services. Only warranties on goods are covered. However, if your warranty covers both the parts provided for a repair and the workmanship in making that repair, the Act does apply to you. (Source: http://www.ftc.gov/index.html).
Finally, the Act does not apply to warranties on products sold for resale or for commercial purposes. The Act covers only warranties on consumer products. This means that only warranties on tangible property normally used for personal, family, or household purposes are covered. (This includes property attached to or installed on real property.) Note that applicability of the Act to a particular product does not, however, depend upon how an individual buyer will use it.
The Author Resource box must be included with the article copy!
Amit Laufer is a writer & Internet Marketer.
MBA - International Trade & Finance.
Bsc. Computers and Information Systems.
Owner Editor of: Lemon Law
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