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.