DRIVEN SOUR – Consumer Rights Under California Lemon Car Laws and Vehicle Dealer Fraud Protections
What’s a Lemon 🍋 Anyhow?
The term 'lemon' has an interesting origin. It’s a slang term that dates back to the early 20th century for something substandard or of poor quality. The term then became popular in the automotive world, where buying a car that turned out to have numerous defects was akin to purchasing a 'lemon' — sour and disappointing. The term gained more traction with the advent of consumer protection movements, leading to laws specifically aimed at protecting consumers from defective vehicles. Thus, the ‘Lemon Law’ was born, protecting car buyers from sour deals.
Distinguishing Lemon Law and Auto-Dealer Fraud
When purchasing a vehicle, California consumers may encounter issues that fall under either Lemon Law or Auto-Dealer fraud. Although these two areas often intersect, they address different problems and provide distinct legal remedies. In short – a lemon is a defectively manufactured car, whereas dealer fraud concerns how you got it.
LEMON LAW – primarily deals with the quality and functionality of the vehicle. It provides recourse for consumers stuck with defective vehicles that cannot be adequately repaired after multiple attempts.
AUTO-DEALER FRAUD – on the other hand, addresses deceptive practices by car dealers during the sale or lease of a vehicle. Fraud can occur regardless of the vehicle’s condition and often involves misrepresentation or withholding of critical information.
What Constitutes A Lemon?
A car is considered a “lemon” 🍋 under California Lemon Law if it meets specific criteria related to defects and repair attempts.
The primary factors include:
Warranty Coverage: Lemon Law claims are breach of warranty claims. So your car must be covered under a manufacturer’s warranty. Therefore, it generally applies to the purchase of new or certified pre-owned vehicles.
Substantial Defects: The vehicle must have significant issues that impair its use, value, or safety.
Reasonable Repair Attempts: The manufacturer or dealer must be given a reasonable number of attempts to fix the defect. Typically, this means:
Multiple Repairs – Four or more repair attempts for the same issue. So your car is likely not a lemon if it’s only been fixed once.
Long Time in the Shop – The vehicle has been out of service for more than 30 days due to repairs. So your car may not qualify if it’s only been in the shop for a few days.
Serious Defect – The defect could cause death or serious bodily injury if the vehicle is driven. So your car’s entertainment center malfunctions likely do not qualify it as a lemon.
Common Types of Lemons:
Engine Problems: Persistent issues like stalling, misfiring, or significant loss of power.
Transmission Issues: Problems with shifting gears, slipping, or total transmission failure.
Brake Failures: Frequent malfunctions or failures in the braking system.
Electrical System Defects: Issues with the vehicle’s electrical components, including lights, dashboard functions, and power windows.
Steering and Suspension Problems: Defects affecting the steering control or vehicle stability.
Examples of Lemons:
Repeated Engine Stalling: You purchase a new car, and within a few months, the engine begins stalling unexpectedly. Despite multiple visits to the dealership, the problem persists. After four unsuccessful repair attempts, the vehicle is still not fixed. Under California Lemon Law, you may be entitled to a replacement vehicle or a full refund.
Transmission Failure: A recently purchased vehicle experiences transmission issues, making it difficult to shift gears. The dealer attempts to repair the transmission multiple times, but the problem recurs. Additionally, the car has been out of service for over 30 days due to these repairs. This situation qualifies the vehicle as a lemon, and you could seek remedies under the law.
Brake System Defects: You buy a used car still under warranty, and soon after, the brakes start failing intermittently. Despite several repair attempts by the manufacturer, the brake issues continue. Given the safety risk, even fewer than four repair attempts may qualify this vehicle as a lemon, entitling you to legal remedies.
What Constitutes Dealer Fraud?
Dealer fraud occurs when a dealership engages in deceptive practices during the sale or lease of a vehicle. This can include
False Advertising – when the car is not what was advertised.
Misrepresentation – misrepresenting the vehicle’s condition, or
Failure to Disclose – hiding important information from the buyer.
Common Types of Dealer Fraud:
Misrepresentation – False claims about the vehicle’s condition, such as lying about its accident history or falsifying maintenance records.
Odometer Fraud – Rolling back the odometer to make it appear that the vehicle has fewer miles than it actually does.
Bait-and-Switch – Advertising one vehicle at a low price to lure customers, then attempting to sell a different, more expensive vehicle.
Undisclosed Damage – Failing to inform the buyer about prior damage or significant issues with the vehicle.
Examples of Dealer Fraud:
Misleading Financing Terms – Dealers may misrepresent the interest rate or terms of the financing, leading buyers to pay more than expected.
Yo-Yo Financing – The dealer allows the buyer to take the car home, only to call back later claiming financing fell through, pressuring the buyer into a less favorable deal.
Title Washing – Dealers transfer titles between states to hide a vehicle's salvage status.
Packing Payments – Including unwanted add-ons like extended warranties in the monthly payment without the buyer’s knowledge.
How Lemon Law and Dealer Fraud Intersect
While Lemon Law and dealer fraud address different aspects of vehicle transactions, they can intersect. For instance, a dealer might sell a defective vehicle (a lemon) without disclosing its issues, or they might falsify records to make the car appear in better condition. When a vehicle sold under fraudulent circumstances turns out to be a lemon, the buyer can pursue legal action under both Lemon Law and dealer fraud statutes.
However, given the legal complexities presented, it is always a good idea to consult a California Lemon Law and Auto-Dealer Fraud Attorney.
Available Legal Protections for California Consumers
Various state and federal laws are available to protect consumers after they unwillingly purchased a lemon.
California’s Song-Beverly Consumer Warranty Act
California's Lemon Law, part of the Song-Beverly Consumer Warranty Act (California Civil Code § 1793.2 et seq.), is designed to protect consumers who purchase or lease vehicles that turn out to be defective despite multiple repair attempts. The law applies to new and used vehicles that are still under the manufacturer’s warranty.
This act mandates that manufacturers must repair defective vehicles covered by warranties. If the defect persists after a reasonable number of repair attempts, the manufacturer is required to replace the vehicle or refund the purchase price.
Key Provisions:
Significant Defects: The vehicle must have substantial issues that impair its use, value, or safety.
Reasonable Repair Attempts: The manufacturer or dealer must be given a reasonable number of attempts to fix the defect.
Refund or Replacement: If the vehicle cannot be repaired, the consumer is entitled to a refund or replacement.
There are Two Types of Warranties:
Express Warranties: These are specific promises made by the manufacturer or dealer about the vehicle's condition and performance.
Implied Warranties: These ensure that the vehicle meets basic standards of quality and performance, even if sold 'as is.'
Remedies Available under California Law:
Refund or Replacement: Consumers are entitled to a refund or replacement vehicle if their vehicle qualifies as a lemon. The refund includes the down payment, monthly payments, and any loan or lease buyout, minus a deduction for usage based on the mileage at the time of the first repair.
Refund: If the vehicle qualifies as a lemon, the manufacturer must refund the purchase price. This includes:
Down payment
Monthly payments made
Loan or lease buyout amounts
Incidental costs such as towing, rental car fees, and repair costs
Replacement: Alternatively, the manufacturer may offer a replacement vehicle of comparable value.
Deduction Possible: A deduction may be made for the use of the vehicle based on the mileage at the time of the first repair attempt.
Incidental and Consequential Damages: Consumers can recover expenses such as towing costs, rental car fees, and repair costs incurred due to the defective vehicle.
Incidental Damages: These cover expenses reasonably incurred in dealing with the defective vehicle, such as:
Towing charges
Rental car fees
Repair costs
Consequential Damages: These cover additional losses resulting from the defect, such as:
Lost wages (if the vehicle issue caused you to miss work)
Increased transportation costs
Civil Penalties: If the manufacturer willfully violates the Song-Beverly Consumer Warranty Act, they may be liable for civil penalties up to twice the amount of actual damages.
This means that in addition to compensatory damages, the manufacturer could be required to pay an amount equal to twice the actual monetary loss suffered by the consumer.
Example Scenario: Imagine you purchase a new car, and it experiences severe transmission issues. Despite multiple repair attempts, the problem persists, and the vehicle spends over 30 days in the shop. Under the Song-Beverly Act, you could receive a full refund, including all payments made and incidental costs. If the manufacturer knowingly sold you a defective vehicle and failed to remedy the situation, they could also face civil penalties up to twice the amount of your actual damages. Moreover, the manufacturer would be required to cover your attorney’s fees, ensuring you are not out of pocket for seeking justice.
California’s Consumer Legal Remedies Act (CLRA)
The Consumer Legal Remedies Act (CLRA), codified in California Civil Code §§ 1750-1784, protects consumers from unfair and deceptive business practices, including false advertising and misrepresentation, during the sale or lease of goods and services - such as cars and vehicles.
Key Provisions:
Broad Scope: Covers any business act or practice that is unlawful, unfair, or fraudulent.
Restitution and Injunction: Provides for restitution to consumers harmed by unfair practices and injunctive relief to prevent ongoing violations.
Standing to Sue: Allows both public prosecutors and private individuals to file lawsuits for violations.
Prohibited Practices include (California Civil Code § 1770):
False Advertising – Misrepresenting goods or services.
Misrepresentation – Claiming goods or services are of a certain standard or quality when they are not.
Deceptive Pricing – Misrepresenting prices or discounts.
Failing to Disclose – Omitting important information about goods or services.
Remedies Available (California Civil Code § 1780):
Actual Damages – Recovery of costs incurred due to deceptive practices.
Punitive Damages – Awarded for fraudulent or malicious actions.
Injunctive Relief – Court orders to stop deceptive practices.
Restitution – Return of money or property.
Attorney’s Fees and Costs – Court-awarded fees if the consumer prevails.
Notice Required (California Civil Code § 1782):
Consumers must notify the defendant of alleged violations and allow 30 days to correct the issues before filing a lawsuit.
Federal Magnuson-Moss Warranty Act
The Magnuson-Moss Warranty Act (15 U.S.C. § 2301 et seq.) is a federal law that protects consumers by ensuring that warranties on consumer products are clearly stated and enforced. It provides consumers with remedies for breaches of warranty and deceptive warranty practices. This act applies to all consumer products, including vehicles.
Key Provisions:
Clear Disclosure: Warranties must be clearly and conspicuously disclosed, including what is covered and for how long.
Remedies for Breach: If a warranty is breached, consumers can seek remedies, including repair, replacement, or refund.
Attorney’s Fees: If a consumer prevails in a warranty dispute, they may recover attorney’s fees.
Federal Trade Commission Act (The FTC Act)
The FTC Act (15 U.S.C. §§ 41-58) is a federal law that outlaws unfair methods of competition and unfair or deceptive acts or practices in commerce. This act empowers the Federal Trade Commission (FTC) to take action against companies engaging in fraudulent or deceptive practices, including auto dealer fraud.
Key Provisions:
Unfair Practices: Prohibits unfair or deceptive acts or practices in commerce.
Enforcement: The FTC can investigate and bring enforcement actions against companies engaging in deceptive practices.
Consumer Protection: Provides a broad framework for consumer protection against fraudulent business practices.
Uniform Commercial Code (UCC) Article 2
The UCC is a set of laws governing commercial transactions in the United States. Article 2 of the UCC deals specifically with the sale of goods, including vehicles. It provides consumers with protections related to the sale and warranties of goods.
Key Provisions:
Key Provisions: Imposes implied warranties of merchantability and fitness for a particular purpose unless expressly disclaimed.
Remedies for Breach: Provides remedies for breach of contract, including the right to reject non-conforming goods or seek damages.
Seller's Obligations: Requires sellers to provide goods that conform to the contract and meet the consumer’s reasonable expectations.
California Unfair Competition Law (UCL)
The California Unfair Competition Law (Business and Professions Code § 17200 et seq.) protects consumers and competitors by prohibiting unlawful, unfair, or fraudulent business acts or practices.
Key Provisions:
Broad Scope: Covers any business act or practice that is unlawful, unfair, or fraudulent.
Restitution and Injunction: Provides for restitution to consumers harmed by unfair practices and injunctive relief to prevent ongoing violations.
Standing to Sue: Allows both public prosecutors and private individuals to file lawsuits for violations.
Action Steps to Take if You Suspect Lemon Law Violations or Dealer Fraud
Document Everything – Keep detailed records of all repairs, communications with the dealer or manufacturer, and any promises made regarding the vehicle.
Notify the Manufacturer – Inform the manufacturer of the persistent issue and give them an opportunity to resolve it. Keep records of all repair attempts.
Consult a Lemon Law or Auto-Dealer Fraud Attorney – An experienced attorney can help navigate the complexities of lemon law and dealer fraud cases, ensuring your rights are protected and helping you seek appropriate compensation.
File a Complaint – You can file a complaint with regulatory agencies such as the Federal Trade Commission (FTC) or the California Department of Consumer Affairs. These agencies can investigate and take action against fraudulent dealerships.
Consider Legal Action – If necessary, your attorney can help you file a lawsuit against the dealer or manufacturer. This may result in a refund, replacement, or monetary compensation.
Frequently Asked Questions (FAQs)
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Under California Lemon Law, a vehicle typically qualifies as a lemon if the same defect has been subject to repair four or more times without success, or if the vehicle has been out of service for more than 30 days due to repairs. However, for severe safety issues, fewer attempts may be necessary.
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Document all repair attempts and keep copies of all related paperwork. Notify the manufacturer and give them a final opportunity to repair the vehicle. If the issue persists, consult with a lemon law attorney to discuss your options for a refund or replacement.
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If you have been deceived by a car dealer, you can file a lawsuit to seek compensation for damages, which may include the cost of repairs, diminished value of the vehicle, and other related expenses. An experienced attorney can help you navigate the legal process and protect your rights.
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Yes, under California Lemon Law, the manufacturer is required to pay for your attorney's fees if your case is successful. This ensures that pursuing a claim does not create a financial burden for the consumer.
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Research the dealership before making a purchase, obtain a vehicle history report, have the car inspected by an independent mechanic, and thoroughly read all contracts before signing. Keeping detailed records of all transactions and communications with the dealer can also provide valuable evidence if needed.
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The California Lemon Law applies to new and used vehicles still under the manufacturer’s warranty, including cars, trucks, motorcycles, RVs, and boats. Certified pre-owned vehicles with an extended warranty also fall under this protection.
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You may bring a case under the Lemon Law within four years of the date you knew or reasonably should have known the product was a lemon. The issue must have started during the warranty period.
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Yes, the Lemon Law applies to both purchased and leased vehicles, as long as they are still under warranty and meet the criteria for a lemon.
