New York lemon law interpretation upheld

In New York, the Court of Appeals recently upheld the Attorney General’s interpretation of the state’s lemon law, which should turn out to be a huge victory for consumers. The automakers are not too happy about it, but then again, the automakers are rarely happy about lemon law decisions.

More below.

Lemon law protection requires four attempts and no more

Under the arbitration procedure that New York established in 1987, consumers were required to submit their vehicle to dealers or manufacturers at least four times to repair a habitual defect before they could seek recourse under the lemon law. Four repair attempts is more than some states require, but it is not an unusually high number. If the problem persisted after four attempts, the consumer had the right to seek either a refund or replacement under the lemon law.

At issue in this court decisions was whether a consumer was entitled to seek relief under the law if, after four attempts, the problem had subsequently been repaired. Automakers, including Saturn, DaimlerChrysler and General Motors, argued that if the problem were fixed on a subsequent repair attempt, such as the fifth or sixth, then the consumer had no reason to seek recourse. Then-Attorney General Eliot Spitzer argued that the four repair attempts were the minimum requirement, and that consumers who met that requirement were entitled to recourse under the law regardless of whether the vehicle was subsequently repaired or not.

Automakers don’t like lemon laws, as they are expensive. They require the company to refund money or provide a new car in exchange for a defective one. Unlike nearly every other sector of manufacturing, the auto industry is unique in that it rarely gives refunds. You can get a refund at Wal-Mart if you buy a television and don’t like it, but if you buy a car, you are stuck. Lemon laws were written to force manufacturers to at least provide refunds or replacements if the vehicles are defective. Automakers go along with these laws, but generally fight them tooth and nail.

The Appeals Court, in a unanimous 7-0 ruling, said that the law, as written, allows consumers to seek recourse if they have met the four repair requirement, even if they fix the car at a later date. Their reasoning is that to rule otherwise would require consumers with defective vehicles to deliberately keep their car or truck in a broken, defective or dangerous state, solely for the purpose of seeking relief from manufacturers. The court ruled that to have consumers do so would constitute an unreasonable burden, especially since most consumers require their vehicle to get to and from work.

This is a victory for consumers and all in all, a minor setback for manufacturers. Most of the time, when a vehicle is defective through four repair attempts, it stays that way. Automakers can do a lot of grumbling, but the net result of this ruling will probably have a minimal effect on their bottom line.