Posted On: December 30, 2007

What is lemon laundering?

Lemon laundering is the practice whereby car manufacturers resell a vehicle to a third innocent subsequent car buyer after it has been repurchased or replaced from the original car owner under applicable state lemon laws. Here at my Dallas, Texas lemon law practice, I get calls about this very often.

The term "lemon laundering" is believed to be first used by Gayle Pena to describe a personal experience she had with purchasing a pre-owned/used lemon car. The car she purchased was a Chevrolet Suburban with defective brakes and transmission.

Contrary to popular belief, the act of lemon laundering is not necessarily illegal, as states have different and varying lemon laws -- it is, however, highly unethical. Unfortunately, car manufacturers are not in the business to be ethical and do it more often than not.

Some state lemon laws do not even address or acknowledge that such practices exist. In fact, car manufacturers use this fact to its advantage to get rid of lemon cars that have previously been repurchased or replaced.

Here's how the scenario works, a car manufacturer drafts an Excel worksheet that lists all 50 state lemon laws in the United States, indicating which state lemon law requires a formal disclosure to consumers that a vehicle has been marked a lemon due to a repurchase or replacement status. The car manufacturers then transports those lemon cars to be sold in those specific states that do not require lemon disclosures.

Please contact your state legislatures about this loophole in your state lemon law. Do not wait until you've been a victim of lemon laundering to act against these car manufacturer's unethical behavior.

Posted On: December 28, 2007

Texas Lemon Law article in the Lufkin Daily News

Jeff Bates, a Texas attorney, wrote an article in the Lufkin Daily News regarding the Texas Lemon Law this past Sunday. The article highlights the three (3) rebuttable presumptions that a consumer is required to meet before becoming eligible for a car repurchase or replacement under the Texas Lemon Law.

The only thing that I would like to add that the article does not mention is the following:

Texas Lemon Law Statute of Limitation: it is important to note that if you are a consumer who purchased a new car and believe that you might have a lemon in possession, then it is important to be mindful of the deadline to file a claim with the Texas Department of Transportation (DOT). Failure to do so might make your vehicle ineligible for the Texas Lemon Law administrative program. Please contact a Texas Lemon Law attorney as soon as possible to determine if the deadline has passed or not.

The Exception to the Texas Lemon Law Thirty (30) Day Out of Service Rule: there is a third rebuttable presumption that states that there is a "substantial impairment" if the vehicle has been out of service for at least 30 days. However, you have to read the entire statute. Section § 2301.605(c) of the General Warranty Complaints of the Texas Occupations Code Annotated (this section is better known as the Texas Lemon Law) states that the "30 days described ... do not include any period during which the manufacturer or distributor lends the owner a comparable motor vehicle while the owner's vehicle is being repaired by a franchised dealer."

Posted On: December 26, 2007

Will Toyota's effort to increase worldwide sales to 9.85 million in 2008 directly create more lemon in Texas?

Toyota has been a consistent reliable brand to drive, with diversified top selling models such as the Camry sedan, the subcompact Corolla, and the semi-environmentally conscious gas/electric hybrid Prius. Growing up, my family were loyal Toyota fans.

However, recently, I've noticed a sharp perceived decrease in the quality of Toyota vehicles. More recalls, more potential client calls under the Texas lemon law, more arbitrations with NCDS, and more complaints about car problems from acquaintances with preowned/used Toyota cars.

On Christmas day (Tuesday, December 25, 2007), Toyota announces that it plans to sell 9.85 million cars worldwide in 2008. According to most analysts, this figure is quite ambiguous due to concerns of a cooling U.S. auto market and a possible recession in the upcoming year.

If Toyota is successful in this endeavor, then it might permanently de-thrown General Motors (GM) in becoming the largest automobile manufacturer in the world. This year (2007), Toyota approximates that it will sell 9.36 million vehicles, as compared to GM's estimated 9.3 million.

It leads me to speculate,...will there be more lemon and defective cars driving on the roads now that Toyota is planning on producing more cars? Although I do not have a crystal ball, my hunch tells me that this will be an inevitable progression, unless Toyota prioritizes its quality control as aggressively as its intention to becoming the world's leading automobile manufacturer. We will wait for 2008 to come and speak for itself...

Posted On: December 25, 2007

Will Texas Lemon Law mimic Wisconsin's proposed puppy lemon law?

The state of Wisconsin is considering a puppy lemon law to protect consumers from puppies or animal with health problems that are unknown to the buyer and were not disclosed prior to the time of purchase by the seller. This will help combat puppy mill establishments and also shift the responsibility over to sellers of puppies and other animals.

This type of law is aimed to avoid a situation where a consumer purchases a puppy/animal and later finds out that the animal has health problems that requires thousands of dollars in subsequent medical bills.

Currently, the Texas Lemon Law does not officially cover animal or puppy lemon laws. I would find it difficult for Texas to mimic or follow suit because the current Texas Lemon Law is being administered by the Texas Department of Transportation to adjudicate defective lemon vehicle claims.

A consumer may be able to file a claim against a pet seller under the current Texas Deceptive Trade Practices Act (DTPA). However, I would like to see the Texas DTPA be updated and expanded with more specific language to cover puppy or other animal purchases so that there is a bright-line test as to what is considered a lemon and what is not.

Posted On: December 25, 2007

Happy Holidays Everyone!

Have a happy and safe holidays.

Posted On: December 12, 2007

Consumer paints lemons on her lemon car and parks it outside near the dealership of purchase

Often times, consumers who purchased lemon cars call my office to seek guidance under the Texas Lemon Law, but I have yet to encounter a potential client that has done this before...

To signify that the vehicle she purchased is a lemon, Christy Direnzo painted yellow lemons and the car dealership’s name on a car she purchased from DJ Enterprises. Thereafter, she parked it near the dealership to warn other car buyers. When she purchased the car, she was informed it only needed $300 worth of repairs. She soon found out it needed approximately $1,500 in repairs.

Another car buyer in Charleston, South Carolina, Mary Grodjeski, also bought a truck from the same dealership. A few weeks later, the transmission and engine went out. Both women tried to take the vehicles back to the dealership in order to get their money back, but were refused. The dealership claims that the vehicle was sold "as-is."

Consumer lawyer, Steven Moskos, informs them of the revocation of acceptance statute that allows a person to ask for a refund based on defects that show up in a reasonable amount of time. This statute is usually not enforced by any state agency and must be fought in civil court. Also, it is easier to win a suit if a warranty or service contract was purchased and the dealership refuses or cannot fix the vehicle.

Unfortunately, if the situation is not covered by state lemon laws that has attorney fee shifting provisions that require the dealership or car manufacturer to pay for the consumer's attorney fees, then cases like these might be cost prohibitive to sue on because of the costs of litigation.

For more information on the story, go here.

Posted On: December 11, 2007

Jalopnik's coverage and guide of car lemon laws

Jalopnik, an online website dedicated to car fanatics, recently posted a guide to lemon laws. Although the discussion on this article did not mention specific Texas Lemon Law, it is still worth a good read to learn about general lemon laws and other related laws that might be helpful to consumers with broken cars.

The article also mentions information about the Magnuson Moss Act, one way arbitration programs, and the Better Business Bureau's (BBB) AutoLine Lemon Law program. Unfortunately, the article attributed Kate Moss to being the co-author of the Magnuson Moss Act -- it is actually Frank E. Moss.

Posted On: December 10, 2007

Texas Lemon Law issue with Chrysler's recent recall on 500,000 vehicles?

With Chrysler's recent announcement of 500,000 recalled vehicles, it is very possible that there may be a Texas lemon law issue involved here. The recall pertains to 2001 - 2002 Dodge vehicles for the following models: Dakota trucks, Durango sport utility vehicles (SUV), Ram vans, and Ram pickup.

The reason for the recall is due to faulty gearshift blocker and bracket assembly components. With a faulty gearshift blocker or bracket assembly, your vehicle could shift out of park, even your without your key being in the ignition. No, this is nothing similar to the robot autopilot car I wrote about several weeks ago.

So far, there has been 9 known nonfatal injuries related to this product defect.

Unfortunately, Chrysler will not be notifying owners of this vehicle until January 2008. It seems like this is a terribly irresponsible thing to do, especially since it took Chrysler 6 to 7 years to finally announce a defect on its 2001/2002 model vehicles and the fact that nine injuries and incidents had to occur before the Detroit-based company is willing to do anything about the issue. Now, they're going to wait an additional minimum of 21 days to let owners know about it. What if a Chrysler car owner suffers from this defect from now until January? ...and what if this 10th incident becomes fatal?

Continue reading " Texas Lemon Law issue with Chrysler's recent recall on 500,000 vehicles? " »

Posted On: December 9, 2007

Texas Lemon Law: how car dealers avoid liability by using the "no problem found" (NPF) or "vehicle operating as designed" excuse.

Often times, my Dallas based lemon law office cannot accept certain potential lemon car cases due to insufficient documentation. What I mean by this is that a consumer might have a very strong lemon law claim, but the potency of their claim has been watered down because of several new techniques that car service centers are using to avoid liability under the Texas Lemon Law.

When a consumer brings a car in for a concern or complaint of a car defect such as "engine noises while driving," the service center is required to document the repair attempt by issuing a repair order for the consumer's visit. Under the Texas Lemon Law, the best way to prove up that you have met one of the 3 prong rebuttable presumption to win your case is through repair invoices.

The first trick that car dealerships use to avoid liability is to conveniently forget to print out repair invoices for the consumer. If you've left a car dealership without a repair order in your hand when you pick up your car, then you've done yourself an injustice. If the dealership says that it does not issue out repair invoices for this type of repair, ...or the repair is too small to constitute additional paperwork,...or "we couldn't find anything wrong"...then you must ask yourself, why are they abandoning normal protocol of issuing out repair invoices to document their time at work?...especially since authorized repair work that has been done under warranty is usually charged or reimbursed to the manufacturer at pre-determined rates and arrangements.

Continue reading " Texas Lemon Law: how car dealers avoid liability by using the "no problem found" (NPF) or "vehicle operating as designed" excuse. " »

Posted On: December 7, 2007

Texas Lemon Law's three-prong factors that will help you win and get a replacement or repurchase on your car.

Texas Lemon Law has a clearly defined three-prong approach on which vehicles are eligible for a lemon law buyback or replacement.

Under Section 2301.605 of the Texas Occupations Code (Title 14, Subtitle A, Chapter 2301, Sub-chapter A), it states in relevant part that a vehicle meets the rebuttable presumption if:

(1) "...the same nonconformity continues to exist after being subject to repair four or more times...,"

(2) "...the same nonconformity creates a serious safety hazard and continues to exist after causing the vehicle to have been subject to repair two or more times...," or

(3) "...a nonconformity still exists that substantially impairs the vehicle's use or market value and... the vehicle is out of service for repair for a cumulative total of 30 or more days..."

Keep in mind that there are more stringent requirements, but I am cutting and pasting relevant parts to help dissect the law into smaller and easier to understand sub parts. Below is a layman's description when it comes to the 3 part rebuttable presumption.

Please note that this is not legal advice. Every situation and case is different and you ought to contact an attorney as soon as possible to get clarification on your set of facts.

To start, what is a "rebuttable presumption"? A rebuttable presumption is something that the court will accept as true, unless it has been unproven or proven otherwise by the manufacturer or car dealer.

Keep in mind that a car owner needs to only meet the one of the three prongs to achieve the rebuttable presumption. However, I always recommend to my clients that they meet at least 2 of the 3 prongs to be safe. I call it the prong backup plan.

The first prong is self explanatory. Keep in mind that same conformity does not necessarily have to be a specific vehicle part, it can be a larger vehicle category, such as the transmission system, brake system, engine, electrical or electronic system, body, and etc. What matters is how you present and frame the nonconformity to the administrative judge and the Texas Department of Transportation's (DOT) case handler.

Regarding interpretations on how the facts are applied to the second and third prong, please contact my lemon law office.

Posted On: December 3, 2007

Texas Lemon Law Summary -- Power Point Presentation.

Too often, consumers are left in the dark about their Texas Lemon Law rights.

Although the internet may be a great resource to research, it may be cluttered with non-specific information about general lemon laws, as opposed to state specific Texas Lemon Law. Other times, it may be cluttered with complex legalese that is difficult to understand.

If you go to my main website, you will find a power point presentation that provides you with a quick summary about the Texas Lemon Law. The power point presentation is located on the right side of the screen, right underneath where it says, "We DO NOT Accept PREOWNED Lemon Law cases." Or, you can click here.

This information is not legal advice, by any means, but at least it serves as a good starting point to learn about your rights and what to do in the event that you were sold a lemon within Texas.