Working in traffic school we often hear nightmare stories from students who bought a used car that turned out to be a
lemon.   So we decided to take a little detour from our defensive driving courses and do some legal research.   Lemon laws protect new car buyers in every state in the nation, but it’s far more common for used car buyers to get stuck with an unreliable vehicle, or to incur repair bills that cost more than the car. For such unfortunate consumers, it often goes downhill from there.

Owners of lemons, as these cars are often called, must still make car payments while their vehicle sits idle. One-sided arbitration clauses — built into practically every dealer’s vehicle sales contract — work to keep many used car buyers from taking a case to court. Finally, a buyer may have to prove that the vehicle’s problems existed prior to the sale in order to get some compensation. These factors plus the subject’s complexity leave many American consumers in the lurch.

“Many of these cars are dangerous to drive,” according to John Van Alst, used car fraud expert with the National Consumer Law Center. “Even if not, when a car becomes inoperable, it becomes a liability instead of an asset.”

Although it’s not always the case, some of these used lemons are sold fraudulently, such as when a dealer fails to disclose the vehicle’s history, misrepresents the vehicle title or tampers with the odometer. Often, these dealers prey on the most vulnerable, low-income segment of the population.

A New Twist: Used Car Lemon Laws
The frequency and severity of consumers’ used car problems has led some state legislatures to pass new laws. Currently, though, only six states, Connecticut, Massachusetts, Minnesota,New Jersey, New Mexico and New York have lemon laws on the books. The laws provide a statutory used car warranty, often based upon the age or mileage of the vehicle. If the vehicle exhibits problems during the warranty period, the dealer is given a chance to repair them. If those fixes don’t work after several tries, the dealer usually must either replace the car or refund the buyer’s money.
At least seven states have some other form of used car buyers’ rights, requiring used car warranties or setting minimum standards for the sale of used cars: They are Arizona, Connecticut, Illinois, Maine, Nevada, New Mexico and Pennsylvania. Still other states, including North Carolina, have an Unfair and Deceptive Practices statute that can be invoked. But only those states with true used car lemon laws require the dealer to provide a replacement or refund for your car.

The Sorry State of Used Car Regulations
Van Alst feels that most states aren’t very effective at protecting used car buyers from the myriad ways they can be swindled. “Most existing used car lemon laws are so limited in scope — the number of days the car is covered and the allowable mileage — that the consumer may not experience the problem or won’t have a chance to act on the problem in that time period,” he said.

For example, Arizona law covers a used car only if a major component breaks within 15 days or 500 miles of its purchase — whichever comes first. For new cars, though, those terms extend to two years or 24,000 miles.

By contrast, many European consumers have stronger protections. In France, for example, a car buyer may cancel the transaction up to seven days after the sale. And a 1999 European Union directive allows consumers to seek redress for any problem that makes a vehicle unfit to drive for a full two years after the purchase.

As is always the case when buying a car, the only way to fully protect yourself is to come armed with information, most easily obtained on the Internet. Many consumer advocacy sites (such as The Center for AutoSafety) discuss new car lemon laws in detail, but obtaining information on used car laws is trickier. We found Car Lemon (an attorney referral site) and Autopedia to have the broadest information on states’ used vehicles lemon laws.

Is Geography Destiny?
What about U.S. consumers who don’t live in a state with a used car lemon law, or whose state law doesn’t cover their individual situation? In those cases, there are federal laws that may help:

  • Uniform Commercial Code (UCC) — Under the UCC, a used car sale automatically includes an implied warranty that the car is fit for transportation. However, used car dealers may “disclaim” (deny) the implied warranty if they sell the vehicle “as is” — which they typically do. In the few states that prohibit dealers from disclaiming the implied warranty (such as the District of Columbia, Maryland, Massachusetts and West Virginia), the UCC can be more effective than a used car lemon law would be.
  • FTC Used Car Rule — The Federal Trade Commission requires dealers who sell six or more cars per year to post a Buyers Guide in every used car that’s offered for sale. The guide must show whether the vehicle is being sold “as is” or with a used car warranty, what percentage (if any) of repair costs is covered by the dealer under the warranty, and a list of the major defects that can occur on used vehicles.
  • Magnuson-Moss Warranty Act (a.k.a. Federal Lemon Law) — This law prohibits the disclaimer of implied warranties when a car is sold with an express written warranty. It also provides for the awarding of attorney fees in particular cases.

How To Prepare for Battle
In order to determine if you truly have a lemon and to build a solid argument, make sure you’ve taken the following steps.

First, run vehicle history reports from Carfax and Autocheck. These reports expose many of the hidden problems associated with used cars, such as prior accidents and branded titles. Edmunds recommends buyers run both reports if possible, because they can sometimes uncover different information. An important fact to consider: U.S. states do not require insurance companies to report when they fix a vehicle, although Canada does.

Do not rely on reports alone. Take the car to a qualified mechanic and to a body shop that can spot signs of structural damage. Make sure they put it up on a lift. As with vehicle history reports, this is best done before the vehicle purchase, but it’s still critical to determine the source of the vehicle’s problem after you own it.

Document the vehicle’s service history and retain all work orders and receipts. Download or print a vehicle repair log from Fraud Guides or Microsoft.

If the dealer still won’t provide satisfaction, or if you suspect fraud, send a complaint to the vehicle’s manufacturer (in writing) and the state attorney general’s office or department of consumer protection. The federal government’s Consumer Action Web site provides detailed information on how and where to file complaints (including sample letters), dispute resolution services, small claims court and more.

Calling Out the Big Guns
You don’t necessarily have to engage a lawyer to fight for your rights; sometimes, a quick trip to small claims court will do the trick. But a good lemon law attorney can determine whether you’ve got a serious case (especially when safety is an issue) and can shepherd you through the legal process. Many lemon lawyers don’t charge client fees, hoping to collect instead from the defendant.

You can find lemon law specialists in your state through the National Association of Consumer Advocates. Free legal aid to low-income individuals is available through the non-profit Legal Services Corporation and National Legal Aid and Defender Association.