Lemon Law

Many people buy used cars, the major reason simply because they simply cannot afford a new car. Whatever the case, consumers do frequent used-car lots when purchasing a car. When it comes to buying a used car, how do consumers protect themselves from unscrupulous dealers? There are three challenges when it comes to consumer protection agencies face when purchasing a used car in the used car market: the first is identifying and making information available to consumers. This includes the condition and history of the car so consumers are able to make sound decisions when it comes to purchasing a used car. The second is preventing deception in the financing of car loans. And the third is educating consumers to prevent the possible debt cycles that result in a repossession of the car. When it comes to responsibilities, both federal and state consumer protection agencies share in these responsibilities (Congressional Testimony). The Motor Vehicle Trade Registration Rule, or Used Car Rule, is a disclosure of warranties the helps consumers know what they are buying. Section 5 of the Federal Trade Commission and law enforcement also helps educates consumers in deceptive advertising and lending. These agencies get information about the condition and history of the car as well as any warranties and terms that may come with the car. Other information where this can also be found is the databases of state authorities, insurance companies and salvage yards. These agencies provide information on warranties to alert consumers of a mitigating risk to broken or damaged systems (Congressional Testimony). On the other hand, the Vehicle History Information is helpful to warn consumers to cars that have sustained flood damage, been totaled, had their odometers altered, or even been bought back as “lemons.” The National Association of Attorneys General (NAAG) does two things: regulates titles to provide information about the car to show if it has ever been titled as salvage, flood, or rebuilt to show prior damage; and to enforce disclosure on the sellers to reveal any damage history or manufacturer’s repurchase according to the state lemon law. In the past, unscrupulous sellers have been able to find ways to cover up a vehicle’s negative history with cosmetic fixes that would allow them to transport the vehicle across state lines in order for them to get a clean title in another state. Consumers who buy these “vehicles” suffer irreparable harm when they take the vehicle in to make repairs and the value of the car decreases when the real history of the vehicle is made known to them. This also poses safety risks to the consumers who drive these vehicles with damaged electrical or mechanical components (Congressional Testimony). January 29, 2009, the Department of Justice, National Motor Vehicle Title Information System (NMVTIS) gathered information from 36 states, an online computer system of accurate information that gives a vehicle’s titling, odometer history, and damage history. This information comes from auto recyclers, junk yards, salvage yards, and insurance carriers. The National Insurance Crime Bureau (NICB) also maintains the same information free to consumers just by accessing the Vehicle Identification Number (VIN). Commercial providers offer the same information to consumers for a fee of around $30 (Congressional Testimony). The Used Car Rule gives information on whether a vehicle has been covered by warranties and the extent of the coverage of the warranties of any costs for repairs. Along with the FTC, it can prohibit sellers from misrepresenting the condition of a vehicle by disclosing if it has been sold with warranties. These disclosures are placed on vehicles to warn consumers of deceptive statements and any spoken promises which would be hard to enforce without a vehicle inspection. Since the Used Care Rule has been in force, there have been more than 80 reports by the Commission from 1985 to 2000 to enforce compliance with the Rule, a number that shows more than $1 million in civilian penalty orders, not to mention the several actions by state agencies to also help enforce the Rule (Congressional Testimony). NAAG and the International Association of Lemon Law Administrators both recommend the Used Car Rule be challenged to require if vehicles purchased under state lemon laws are applicable under state and manufacturer warranties. These agencies would advocate for mandatory disclosures for vehicle history of title branding and whether prior use of a vehicle was used as a rental car, taxi, or other commercial vehicle. If the Commission amends the Rule, it would look at possible unfair prevalent or deceptive acts that can impact consumers, and whether these remedies harm consumers and if the benefits can exceed costs (Congressional Testimony). In the past, sellers have been able to cover up a vehicle’s history, but with the Used Car Rule, consumers can be forewarned about a vehicle’s history upfront and learn about any kind of damage history about the vehicle before they decide to purchase. Both federal and state agencies gather information on used cars to provide consumers with websites to access a vehicle’s history. Reference Congressional Testimony. (2009, March). USED CARS AND CONSUMER PROTECTION:EILEEN HARRINGTON Retrieved from http://elibrary.bigchalk.com.ezp-00rrw.lirn.net