Prior to enactment of the Lemon Laws, automotive consumers had little protection when they purchased a vehicle that later had repeated problems caused by manufacturing defects. The consumer was expected to return the vehicle to the repair shop to have the problem fixed under the manufacturer's automobile warranty. This was not only an inconvenience, but could also be dangerous if the problem was not properly fixed, thereby possibly affecting the safety, value, and use of the vehicle.
The Magnuson-Moss Warranty Act which was enacted by Congress in 1975, while much broader in its scope, is basically the Federal Lemon Law designed to protect consumers who purchased defective vehicles. Each state now has its own version of the Lemon Laws for new vehicle purchases. Most states also cover leased vehicles and some also provide relief for purchasers of used vehicles subject to certain conditions. Lemon laws may also include mobile homes, motorcycles, and boats.
California's Lemon Law puts California consumers among the most protected in the nation. But this has not always been true. The law has evolved and been amended over the years to include other categories of purchasers and lessors of motor vehicles, thereby expanding consumer rights.
The California Song-Beverly Consumer Warranty Act was enacted in 1970 to protect consumers who purchased or leased new automobiles which turned out to be "lemons" because of manufacturing defects. The Act stated that if the manufacturer or its authorized dealer was unable to service or repair a new vehicle to meet the terms of the manufacturer's written warranty after a "reasonable number of repair attempts", the manufacturer was required replace the vehicle or return the purchase price to the buyer or lessee. Regrettably, the term "reasonable number of repair attempts" was poorly defined and left to the discretion of the manufacturer. Also, a manufacturer could refuse to repurchase the vehicle if it determined that the vehicle had been abused by the buyer after delivery, for example, if the terms of the maintenance and instructions for proper use of the vehicle had not been followed.
In 1982 California assembly member, Sally Tanner, proposes new guidelines for California's Lemon Laws which took effect in January, 1983 and set clearer guidelines for what is a "reasonable number of repair attempts. The number of attempts was to be determined according to the nature of the problem and in particular as related to the safety of the vehicle. Further, the act was expanded to include the sale or lease of used vehicles which were still covered by the manufacturer's original new car warranty at the time of purchase. This law became the model for Lemon Law statutes in all 50 states.
In 1987 the California Arbitration Act was enacted to withdraw the power of states to require judicial resolution. This encouraged manufacturers and consumers to resolve their disputes by non-judicial means such as mediation and arbitration before resorting to court.
The Consumer Notification Act was introduced in 1991 to protect consumers from purchasing or leasing vehicles that manufacturers had previously repurchased as "lemons." Under this act, auto manufacturers were required to brand the titles of reacquired "lemons" and submit the vehicles' titles of those vehicles to the California Department of Motor Vehicles. If the reacquired vehicle was to be resold, the necessary repairs first had to be made, and the manufacturer and its dealers had to disclose to the potential buyer or lessor that the vehicle had been repurchased under California lemon laws and that the title was branded.
In 1992 the art of the Song-Beverly Consumer Warranty Act which pertains to motor vehicles, i.e., the California Lemon Law, was renamed the "Tanner Consumer Protection Act" in honor of its author, California assembly member, Sally Tanner.
In 1995 the California legislature enacted additional enforcement provisions which provided for the suspension of the licenses of manufacturers who did not adhere to the provisions of the Act.
Prior to 1998 upon the repurchase of a "lemon" manufacturers prohibited the disclosure of the terms of the buyback settlement agreement. In 1998 this was changed so that only the financial terms of the settlement could be prohibited from being disclosed.
Two new major amendments, Assembly Bill 1290 and Senate Bill 1718, were passed in 1999 and 2000 providing additional protection for consumers. Under AB1290 one of the definitions of ""reasonable of repair attempts," was expanded to apply its protections for 18 months or 18,000 miles instead of 12 months or 12,000 miles. SB 1718 further clarified the term "reasonable number of repair attempts," as applies to vehicle defects likely to cause death or serious bodily injury, by reducing the number of failed repair attempts from four to two. It also expanded Lemon Law protection to those vehicles bought or used primarily by a business, so long as the vehicle weight is less than 10,000 pounds and 5 or fewer vehicles are registered in the name of the business.
Current financial reform efforts hoped to further protect automobile consumers by regulating the finance and insurance practices of dealerships so us to prevent certain kinds of unfair and deceptive practices. The National Automobile Dealers Association (NADA) successfully lobbied for its car dealers to be exempted from this financial regulation. Nevertheless, the new Consumer Financial Protection Agency (CFPA) will create a strong, independent consumer agency that will help to eliminate many of the tricks and traps of industry.