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Michigan's Lemon Law

Steve Lehto: Lehto@Kennon.com
 

(MCL 257.1401 ET SEQ)

Michigan's "Lemon Law," was enacted to protect consumers who have purchased new cars with serious defects which the manufacturer cannot or will not fix under warranty. The law defines a lemon as a new motor vehicle that has a defect that substantially impairs the use or value of the vehicle, and which has not been repaired after a reasonable number of attempts. If the substantial defect still exists or recurs after a reasonable number of repair attempts, the consumer has the right to a refund or a replacement vehicle.

Any new car, van or truck bought by a resident of Michigan for personal or family use is covered by the Lemon Law so that if a defect occurs within the first year of ownership OR within the express written manufacturer's warranty (whichever is earlier), it may qualify as a lemon if the problem persists.

The Lemon Law gives the manufacturer, its agent or authorized dealer a "reasonable number of attempts" to repair the substantial defect. A reasonable number of attempts has been allowed when either of the following happens:

  • repair is attempted four or more times for the same substantial defect, and the problem persists (with the first repair within the first year of ownership or during the express manufacturer's warranty period, whichever is earlier);

OR

  • repair attempts for any substantial defect or combination of defects total 30 or more days during the first year of ownership (not necessarily all at one time.)
  • The defect must continue or recur after a reasonable number of repair attempts to qualify as a lemon. However, prior to the last repair attempt you must give the manufacturer a "last chance" to repair your vehicle. That means after the third repair fails, or after the vehicle has been in for repairs for 25 days, you must notify the manufacturer that you are giving them a final attempt to repair your vehicle, or you will proceed under the lemon law

Final Repair Attempt You should send notification of the final opportunity to repair (the "last chance letter") by certified mail, return receipt requested, to the manufacturer's regional office. You may get this address from you Owner's Manual. Keeping copies of your letters is the best way to document that the manufacturer was provided a final opportunity notice.

  • The manufacturer may choose not to use this final opportunity to attempt repair. The manufacturer must notify you within a reasonable time of where you are to take your vehicle for the last repair attempt. If they do not do notify you, or if they do and the substantial defect has not been repaired, or has been repaired and recurs, you have the right to demand a refund or replacement under the Lemon Law. If the manufacturer does not comply voluntarily, you may then seek your remedies under the Lemon Law, including replacement of the vehicle, or a refund of the purchase price as described below.

REPLACEMENT If your vehicle qualifies as a lemon, the manufacturer must either replace your defective vehicle with a suitable replacement of equal value, or refund your money to you and take the vehicle back. You may reject a replacement vehicle and demand a refund.

Reasonable allowance for use: Under the Lemon Law, a reasonable allowance for use will be taken by the manufacturer, but this deduction is only $.10 (ten cents) per mile for the mileage you drove the vehicle before the first complaint was made to the dealer or manufacturer regarding the defect(s) in the vehicle. Included in your refund will be: sales tax; registration fees; finance charges on a loan; dealer-added options; unreimbursed towing or rental charges resulting from the defect; unused portion of an extended warranty, unused portion of credit insurance; defect related incidental costs; and other incidental costs.

If your vehicle was purchased or leased after January 1, 1999, the offset for usage is calculated using a different formula. It is still triggered by the number of miles driven prior to the first complaint. That number is used as the numerator - the top half of a fraction - with 100,000 as the denominator. That fraction is multiplied with the purchase price and the resulting amount is the offset for usage. However, the law now allows the manufacturer to claim as part of the offset any miles driven over 25,000 - so those must be added to the numerator as well. If you drove your car 10,000 miles at the first complaint and it cost $30,000, you would lose as an offset $3,000 (10,000 over 100,000 = 1/10th of the purchase price; 1/10th of $30,000 = $3,000.)

Arbitration is available from most manufacturers if you believe that your vehicle is a lemon. In arbitration, the consumer and the manufacturer present evidence about the condition of the vehicle to a panel of arbitrators. These arbitrators can usually order partial refunds as well as full ones. The manufacturers are also bound by the decisions of their arbitration programs. If you are dissatisfied with the results of manufacturer sponsored arbitration, you may then proceed to file suit. For specific information on your manufacturer's arbitration program, look in the warranty booklet that came with your car.

If you are considering court action, you should consult an attorney. Further, depending on whether the manufacturer's arbitration process meets certain federal guidelines, you may NOT have to use it prior to filing suit. If you do not know whether your manufacturer's arbitration meets those guidelines, consult an attorney specializing in lemon law. You may contact me with the name of your manufacturer if you are in Michigan, and I will answer any questions you might have regarding this, or anything else above.


MICHIGAN'S CONSUMER PROTECTION ACT
(MCL 445.901 et seq)

Michigan's Consumer Protection Act was designed to prevent consumer fraud, and to make it easier for you to fight back against unscrupulous merchants. The Act states that unfair, unconscionable, or deceptive methods, acts or practices in the conduct of trade or commerce are unlawful, and then defines a variety of situations in which a consumer would have a remedy under the Act. In all there are more than thirty "methods, acts or practices" defined within the Act, but some of the more common are described below:

  1. Representing that goods are new if they are deteriorated, altered, reconditioned, used, or secondhand.
  2. Advertising or representing goods or services with intent not to dispose of those goods or services as advertised or represented.
  3. Advertising goods or services with intent not to supply reasonably expectable public demand, unless the advertisement discloses a limitation of quantity in immediate conjunction with the advertised goods or services.
  4. Representing that a part, replacement, or repair service is needed when it is not.
  5. Misrepresenting that because of some defect in a your home the health, safety, or lives of the you or your family are in danger if the product or services are not purchased, when in fact the defect does not exist or the product or services would not remove the danger.
  6. Causing a probability of confusion or of misunderstanding as to the legal rights, obligations, or remedies of a party to a transaction.
  7. Failing to reveal a material fact, the omission of which tends to mislead or deceive you, and which fact could not reasonably be known by the you.
  8. Entering into a consumer transaction in which you waive or purport to waive a right, benefit, or immunity provided by law, unless the waiver is clearly stated and you have specifically consented to it.
  9. Failing, in a consumer transaction which is rescinded, canceled, or otherwise terminated in accordance with the terms of an agreement, advertisement, representation, or provision of law, to promptly restore to the person or persons entitled thereto any deposit, down payment, or other payment, or in the case of property traded in but not available, the greater of the agreed value or the fair market value of the property, or to cancel within a specified time or an otherwise reasonable time an acquired security interest.
  10. Gross discrepancies between the oral representations of the seller and the written agreement covering the same transaction
  11. Failure of the other party to the transaction to provide the promised benefits.
  12. Charging you a price that is grossly in excess of the price at which similar property or services are sold.
  13. Causing coercion and duress as the result of the time and nature of a sales presentation.

These are some of the acts and practices which are unlawful under the Michigan Consumer Protection Act. If you feel that you have been victimized by a practice described above, or by an unfair, unconscionable or deceptive act, then the Act offers remedies which you can take advantage of.

You may bring an action to recover your actual damages (or $250, whichever is more.) Further, if you are successful in recovering damages in your action, the court will order the Defendant to pay your court costs and attorney fees for the action. You may bring a class action on your own behalf and for all others in this state who have been harmed as described in this act if the violations affect a number of consumers. Class actions are very powerful tools for consumers. Keep in mind that if you have been harmed in what seems like a small amount -- if a large number of consumers have been harmed the same way, the amount of money being made by the unscrupulous person or company can add up to quite a bit. For example, I have had a case where several hundred people were harmed under this Act for $15 to $30 each. Although they could have each filed claims, it made more sense to join together and collectively take action.

Also, you may ask the court for a judgment declaring the acts of the Defendant unlawful and for an injunction to enjoin the Defendant from continuing or taking unlawful actions under the Act. In all these actions, the attorney fees and court costs of yours are recoverable from the Defendant if you succeed.

Finally, note that the Attorney General of Michigan has powers to enforce the provisions of this Act as well. Although he cannot represent you in a civil action as a private attorney, he can represent the State of Michigan and take action against Defendants when he feels that the interests of Consumers are being threatened.