Resolving Lemon Law Disputes
Sep 28, 2021 by Juan Herrera, Vice President of Dispute Resolution Programs, BBB National Programs
In 1975, Congress passed the Magnuson-Moss Warranty Act, designed to inform consumers about the products they buy. One of the key features of Mag-Moss, as well as with state “lemon laws,” is a requirement for consumers to use a manufacturer’s designated arbitration program before litigating, as long as the manufacturer’s program complies with relevant Federal Trade Commission (FTC) regulations. Under FTC Rule 703, this is known as “prior resort”. Thus, the way was paved for BBB AUTO LINE, founded in 1982 and one of the largest and longest-running independent auto warranty dispute resolution programs in the United States.
At BBB AUTO LINE we help consumers and manufacturers resolve their automotive warranty disputes before they go to court. In fact, more than 60% of all cases filed with AUTO LINE are resolved through mediation, which involves one of our trained specialists facilitating settlement discussions between the consumer and manufacturer.
What is BBB AUTO LINE?
BBB AUTO LINE is an independent dispute resolution program administered by BBB National Programs. Our out-of-court program uses conciliation, facilitated negotiations, and arbitration to resolve vehicle warranty disputes between consumers and automobile manufacturers. Customers filing a claim with BBB AUTO LINE must allege a defect in the materials or workmanship of their vehicle. A lesser-known fact is that we work with all types of vehicles — from cars to motorcycles to RVs.
While the program fundamentals have remained the same since inception, being part of BBB National Programs has given us the opportunity to expand on our mission of supporting consumer trust by developing industry self-regulation and dispute resolution programs that go beyond automobiles.
What is the “lemon law”?
Lemon laws are U.S. state laws that provide a remedy for purchasers of cars and other goods for a product that repeatedly fails to meet a standard of quality and performance. On the federal level, the lemon law is known as the Magnuson-Moss Warranty Act. While the state and federal laws are similar, there are key differences that consumers should be aware of. Our Abby Adams recently wrote a great blog post discussing these differences.
Why do we call bad cars lemons? There are many theories, including an old Volkswagen commercial that labeled a car a “lemon,” 20th-century American slang, common terminology traced to the 1960s for defective cars, and British pool hall slang. Wherever the term came from, it is now a common and well understood term in most communities.
What is or is not covered by BBB AUTO LINE?
BBB AUTO LINE covers any vehicle defects in materials or workmanship that are covered under the vehicle’s warranty. To be eligible, the manufacturer of your vehicle must be a participant in our program, meaning, they have designated BBB AUTO LINE as the agreed upon dispute resolution provider in your vehicle warranty. You can check your warranty documents or visit our website to determine if your manufacturer participates in our program.
Our program only covers vehicle defects, which means we do not cover disputes involving advertising/sales, billing collections, delivery concerns, problems with a service, etc. If you have one of these business disputes, we recommend that you contact your local Better Business Bureau office.
How does the AUTO LINE process work?
In a nutshell:
- A consumer files a claim with our program.
- Once a claim is filed, the claim is reviewed for eligibility.
- If a claim is found to be eligible, the program assigns a Dispute Resolution Specialist whose role is to help both parties, the consumer and the manufacturer, navigate the process to work out a solution for the claim.
- If no mutually agreeable solution is found, at the consumer’s request, BBB AUTO LINE begins the arbitration process.
- BBB AUTO LINE makes every effort to resolve the claim within 40 days from when the claim is filed.
What outcomes can a consumer expect?
The program offers a variety of remedies to an eligible consumer such as repurchase of the vehicle, replacement, repairs, or reimbursement for out-of-pocket expenses. However, the actual outcome of an individual dispute will vary depending on a variety of factors including the extent of the defect, what has been done to remedy the defect, what the two parties are able to negotiate, or what an arbiter decides is an equitable remedy, among other things. A good place to start researching potential remedies is to check your state lemon law for what the law allows for in your state.
What about vehicle manufacturer class actions?
In addition to our work with vehicle warranty disputes, BBB National Programs serves as an arbitration provider to resolve disputes arising under certain class action settlements. Participating companies agree to our arbitration process to resolve disputes for claimants who have been denied compensation under the terms of the class action settlement. Currently, four of the largest automotive companies offer a class action arbitration program with us as their arbitration provider. If your vehicle is subject to a class action settlement, check our website to see if BBB National Programs is the designated arbitration provider. We are currently managing the arbitration for nine class action settlements.