Division of Consumer Affairs

Someone once said that the worst car trouble you can have is when your engine does not start and your payments do not stop. Barbara Pezzuto's case illustrates just how big a problem this can be and just what New Jersey can do to help. Ms. Pezzuto, of Linden, owned a 1996 Thunderbird and complained that her brakes and electrical system did not work. After trying to resolve the problems with the Ford Motor Company on her own, Ms. Pezzuto asked the New Jersey Division of Consumer Affairs' ("Consumer Affairs") Lemon Law Unit ("Unit") for help. With the Unit's assistance, Ms. Pezzuto got satisfaction; Ford Motor Company paid her $21,412.36 for her problems. "I would like to thank everyone in your office for their help," Ms. Pezzuto wrote to Consumer Affairs. "It is nice to know that there are places for the consumer to go when in need."

That "place" is Consumer Affairs' Lemon Law Unit, created after the New Jersey Legislature enacted the "Motor Vehicle Warranty Act," N.J.S.A. 56:12-29 et seq., in 1989 to take care of thousands of citizens who had invested large sums of money in buying or leasing a new car or motorcycle, only to find out that they did not work properly. This law, popularly known as the "Lemon Law," assures buyers or lessors of new cars and motorcycles that they no longer must fend for themselves if they discovered their new vehicles were expensive lemons. As an earlier Lemon Law report also noted: "New Jersey's Lemon Law, when combined with Lemon Laws in most other states, has created an important financial incentive for car manufacturers to improve the quality of cars sold in the state and to better monitor the repair practices of their authorized dealers."1 In 1989, 45 states had lemon laws in place, providing varying levels of protection to consumers.2 Since then, the remaining five states and the District of Columbia have passed lemon laws.

When New Jersey's Lemon Law took effect, it was considered one of the strongest in the nation. Today, it still remains one of the country's most highly regarded lemon laws. The law requires Consumer Affairs to periodically report on the successes and failures of the program to the Legislature. Ten years is an appropriate milestone at which to pause and examine the record and report on its successes and failures. In addition, the Lemon Law's siblings, for used cars and motorized wheelchairs, also require reports to the Legislature. On this, the 10th anniversary of the New Car Lemon Law, Consumer Affairs makes a comprehensive report on the New Car Lemon Law program, the Used Car Lemon Law, N.J.S.A. 56:8-67, et seq. and the Motorized Wheelchair Lemon Law, N.J.S.A. 56:12-75, et seq.

A General Overview

Most people who buy a new car will never have any reason to call Consumer Affairs' Lemon Law Unit. Of the nearly 3.6 million cars registered in New Jersey between 1989 and 1998, the overwhelming majority turned out to be just fine. But for those who did have a lemon, the New Car Lemon Law can be summed up in one word: success. From March 1989 to March 1999, auto manufacturers provided $30,186,069 in restitution, repairs or replacement vehicles to New Jersey citizens who bought or leased vehicles that were defective. This does not count the additional millions of dollars manufacturers provided directly to car and motorcycle buyers through the manufacturers' own independent mediation efforts or the money saved as manufacturers began to build more reliable cars.

There are many ways to measure the success of the Lemon Law. Restitution is certainly an important way and $30 million represents a tremendous response for those citizens who thought they were stuck with cars that did not work. Another measure of the law is how often the State's citizens make use of it. Our experience during the past decade strongly suggests that the Lemon Law is a vibrant program. Consumer Affairs measures the Lemon Law's success by how much money is reimbursed to consumers and by how many defective vehicles are replaced. Since March 1989, about 140,000 purchasers of new vehicles have called or written to the Unit with questions about the Lemon Law or with complaints against manufacturers. The Unit averages about 14,000 calls each year from concerned purchasers of new cars. As these figures suggest, Ms. Pezzuto was not alone.

Not everyone who calls or writes has a successful claim, but in the past 10 years, these inquiries resulted in more than 7,000 citizens filing complaints, another indication the program is working. The best measure is the bottom line, and the bottom line is that from March 1989 to March 1999, auto manufacturers paid exactly $30,186,069 in restitution, repairs and replacement vehicles to New Jerseyans who bought vehicles that were defective.

Of the $30 million figure, the manufacturers paid $17.7 million in cash to citizens, putting back in the consumers' pockets their costs of buying and repairing these frustrating vehicles. Another $12 million represents the value of vehicles the manufacturers gave customers outright to replace the lemons with cars that worked. Approximately $383,000 represents the value of repairs manufacturers provided consumers after claims were filed against them.

During the second year of the law, the amount of money reimbursed to consumers more than doubled, and the total of vehicles replaced almost tripled. Since then, the numbers have mostly hovered around the $3 million mark.

New Jersey Lemon Law Activity Level
(1989 to March 1999)

	Telephone	Walk-in Inquiries	Mail	*Cases sent to Office of Administrative Law
1989	7,743	29	683	63
1990	6,280	25	3,220	295
1991	3,850	70	1,866	307
1992	6,800	41	3,808	323
1993	14,757	53	3,020	347
1994	13,368	86	3,922	345
1995	14,365	80	3,570	351
1996	16,052	118	3,374	363
1997	14,448	77	3,337	354
1998	9,396	70	3,577	303
1999	1,653	2	300	**72 (1st 3 mos.)
Totals	108,712	651	30,677	3,123

*Source: Office of Administrative Law ("OAL") Docket Logs.
**Source: Consumer Affairs' Lemon Law Unit Log of Cases Scheduled Before OAL.

Restitution Tools
(March 1989 to March 1999)

	Reimbursements	Approx. Val. of Replacement Vehicles	Totals
1989-1990	$909,208.00	$427,356.00	$1,336,564.00
1990-1991	$1,833,936.00	$1,276,846.00	$3,110,782.00
1991-1992	$1,923,329.00	$1,122,332.00	$3,045,571.00
1992-1993	$1,565,519.00	$1,528,371.00	$3,093,890.00
1993-1994	$1,685,006.00	$1,500,541.00	$3,185,547.00
1994-1995	$2,051,735.00	$1,329,883.00	$3,381,618.00
1995-1996	$1,662,935.00	$1,105,488.00	$2,768,423.00
1996-1997	$2,087,179.00	$1,619,965.00	$3,707,135.00
1997-1998	$2,212,431.00	$1,213,246.00	$3,425,677.00
1998-1999	$1,827,917.00	$919,448.00	$2,747,365.00
Totals	$17,759,105.00	$12,043,467.00	$29,802,572.00

Total of Estimated Value of Repairs and Manufacturer certificates
(from March 1989 to March 1999)
$383,497

Total of Resolution
$30,186,069

If A Consumer Chooses To File Suit

The Lemon Law allows consumers to file suit in the Superior Court of New Jersey. If you choose to do this, you cannot use Consumer Affairs' Lemon Law program. Before the Lemon Law was enacted, cases were settled by state Superior Court suits that could be costly and lengthy. This option is still open to consumers, but this route takes longer than pursuing a claim through the Lemon Law Unit.

Cases Broken Down By Manufacturer

During the past 10 years of claims, some manufacturers have had to respond to more claims than others. Some of this is to be expected since some manufacturers sell disproportionately more cars in New Jersey than others do. But even when the disparity in the volume of cars sold by each manufacturer is taken into account, certain manufacturers had more claims made against them than others.

During the past 10 years, the Polk Company reports that 3,585,104 new cars were registered in New Jersey. The five manufacturers with the greatest volume of new cars registered was measured by the Polk figures between 1989 and 1998 were: General Motors with 970,279 new cars registered over the 10-year period, or 27.06 percent of the overall new car registrations; Ford with 782,826 or 21.83 percent; Toyota/Lexus with 368,333 or 10.27 percent; Honda/Acura with 320,982 or 9 percent; and Chrysler with 297,983 or 8.31 percent. These top five companies accounted for more than three-quarters (76 percent) of the 3.58 million new cars registered in New Jersey during the past decade. General Motors and Ford were first and second in the number of registrations, respectively, in each of the 10 years between 1989 and 1998.

The top five manufacturers against which the greatest number of complaints were filed and which were sent to the OAL during the same period were Ford (27 percent), Chrysler (24 percent), General Motors (22 percent), Hyundai (5 percent), Nissan (3 percent) and Volkswagen/Audi (3 percent). These companies accounted for 84 percent of the cases sent to the OAL.

This measure, taken alone, can be misleading, and the Lemon Law Unit cautions citizens not to conclude that a high number of complaints equals greater frequency of lemons. It would be reasonable to expect that a manufacturer which sells significantly more cars than another would have more complaints filed against it than would the company to which it was being compared. It would be more useful for consumers to compare the number of complaints relative to the number of registrations. When you examine the situation by using this statistical perspective, the ratio of OAL complaints to new car registrations, Honda/Acura had the lowest incidence of OAL complaints, one complaint for every 5,350 cars registered; followed by Toyota/Lexus, 1:4,911; Subaru, 1: 3,945; Nissan/Infiniti, 1:2,571; and Volvo 1:2,557. The greatest incidence of OAL complaints were filed against Chrysler, one complaint for every 392 cars registered in New Jersey; Hyundai, 1:494; in New Jersey; Mitsubishi, 1:839; Saab, 1:857; and Volkswagen/Audi, 1:993. General Motors and Ford fell somewhere in the middle. General Motors had one complaint for every 1,406 new cars registered and Ford had one for every 1,037.

The Division's Report draws no conclusions about the reliability of these manufacturers' vehicles. It cannot be said that these figures show that one company makes perfect cars and one makes lemons. These numbers are meant only to offer another statistical snapshot of the past 10 years.

Cases Broken Down By Manufacturer
(from March 1989 to March 1999)

Manufacturer	Registration Totals	Percentage of registration totals	Complaints Resulting in OAL Cases	Ration of Complaints to Registrations	Percentage of complaints
General Motors	970,279	27.06	690	1:1,406	22
Ford	782,826	21.83	755	1:1,037	24
Toyota/Lexus	368,333	10.27	75	1:4,911	2
Chrysler	297,983	8.31	759	1:392	24
Honda/Acura	320,982	9	60	1:5,350	2
Nissan/Infiniti	244,305	6.81	95	1:2,571	3
Mazda	94,445	2.63	84	1:1,124	3
Volkswagen/Audi	96,292	2.68	97	1:993	3
Hyundai	73,060	2.04	148	1:494	5
Mitsubishi	65,450	1.82	78	1:839	2.5
Volvo	63,922	1.78	25	1:2,557	1
BMW	58,688	1.64	36	1:1,1630	1
Subaru	55,227	1.54	14	1:3,945	0.5
Mercedes	52,604	1.47	25	1:2,104	1
Saab	18,853	.52	22	1:857	1
Miscellaneous	21,855	.60	160	1:136	5
Totals	3,585,104		3,123

Cases Broken Down by Manufacturer
(10-year Complaints Resulting in OAL Cases)

Manufacturer	1989	1990	1991	1992	1993	1994	1995	1996	1997	1998	1999	Totals
General Motors	26	86	66	81	82	77	54	57	78	60	23	690
Ford	11	67	74	70	79	77	104	104	84	74	11	755
Toyota/Lexus	1	6	8	8	6	6	16	8	12	3	1	75
Chrysler	9	54	76	65	75	86	89	115	100	80	10	759
Honda/Acura	1	7	4	6	13	4	7	4	6	5	3	60
Nissan/Infiniti	0	10	5	9	7	11	14	15	12	11	1	95
Mazda	1	2	6	3	28	18	10	4	8	4	0	84
Volkswagen/Audi	2	11	18	21	9	5	10	7	9	5	0	97
Hyundai	3	11	14	23	17	18	19	16	13	11	3	148
Mitsubishi	1	7	5	11	8	11	5	11	8	9	2	78
Volvo	0	3	3	4	0	6	3	2	2	1	1	25
BMW	1	0	2	5	4	1	4	6	5	6	2	36
Subaru	0	3	3	3	1	1	0	0	2	1	0	14
Mercedes	0	1	3	4	3	4	5	2	2	1	0	25
Saab	2	2	2	1	2	1	2	6	2	2	0	22
Misc.	5	25	18	9	13	19	9	6	11	30	15	160
Totals	63	295	307	323	347	345	351	363	354	303	72	3,123

Cases Broken Down by Manufacturer
(10-year Registration Totals)

Manufacturer	1989	1990	1991	1992	1993	1994	1995	1996	1997	1998	Totals
General Motors	122,493	104,947	97,390	95,958	100,289	98,278	95,692	88,287	86,689	81,316	970,279
Ford	97,241	85,969	72,745	76,596	85,284	80,485	75,109	75,327	69,380	64,690	782,826
Toyota/Lexus	32,004	39,738	38,627	37,738	36,802	36,976	36,722	36,779	34,755	38,192	368,333
Chrysler	40,065	31,585	23,923	25,037	32,185	32,417	32,576	28,894	26,001	25,300	397,983
Honda/Acura	34,275	32,508	30,250	31,169	29,949	31,566	29,660	32,927	33,724	34,954	320,982
Nissan/Infiniti	23,537	23,064	15,769	19,990	26,872	30,460	27,044	26,612	27,004	23,953	244,305
Toyota/Lexus	32,004	39,738	38,627	37,738	36,802	36,976	36,722	36,779	34,755	38,192	368,333
Mazda	8,256	7,819	8,139	10,231	12,713	12,465	9,491	7,242	8,398	10,231	94,445
Volkswagen/Audi	9,245	9,425	6,855	6,470	4,254	7,765	9,450	11,558	12,859	18,411	96,292
Hyundai	12,295	9,563	8,635	7,320	7,351	7,232	5,948	4,673	4,756	5,287	73,060
Mitsubishi	5,756	5,036	6,110	5,202	6,428	9,170	6,680	7,930	7,371	5,287	65,450
Volvo	10,414	6,779	5,152	5,870	5,583	5,478	5,271	5,815	6,291	7,269	63,922
BMW	3,331	3,200	2,686	4,657	6,164	6,051	6,566	7,443	8,815	9,775	58,688
Subaru	8,084	4,791	5,704	4,412	4,789	5,094	4,467	6,260	6,391	5,235	55,227
Mercedes	3,549	3,516	2,360	5,290	4,978	5,027	5,429	6,548	7,487	8,420	52,604
Sabb	1,806	1,309	1,449	2,201	1,565	1,740	1,983	2,021	2,345	2,434	18,853
Miscellaneous	2,785	2,238	1,362	694	1,185	1,374	1,515	1,449	2,769	6,484	21,855

Total 3,585,104

Qualifications Under The Lemon Law

The Lemon Law applies to (1) all new passenger vehicles and motorcycles bought, leased or registered in the state of New Jersey (2) within two years of the original date of delivery, or 18,000 miles, whichever comes first, and (3) which have a material impairment affecting the vehicle's use, value or safety.

What is a "material impairment?" A good example would be brakes that do not work or a transmission which refuses to shift gears.

The Lemon Law allows the manufacturer a "reasonable amount of time" to repair or correct a defect. As in baseball, the manufacturer gets three "strikes" before he is out of chances to make repairs. The law also limits the amount of time that a car or motorcycle may be out of service as a result of one or more defects or repairs to 20 cumulative days. After at least the second repair attempt, the consumer must notify the manufacturer, in writing, that he/she is giving the manufacturer one final chance to repair the vehicle and that the consumer may have a claim under the Lemon Law. The letter must be sent via certified mail, return receipt requested.

The manufacturer then has 10 calendar days after receiving the letter to make a final repair. A consumer has the right, under the Lemon Law, to demand a refund or replacement vehicle if the defect is not repaired within this time.

The new car Lemon Law does not apply if your car is a used vehicle (although it may be covered under the Used Car Lemon Law. See page 27.) The Lemon Law also does not apply if you have not informed the manufacturer of the defect before the 2-year or 18,000-mile limit, whichever comes first. In addition, the Lemon Law does not apply if the defects you are complaining about were caused by attempts to repair or modify the vehicle by a person other than the manufacturer, its agent or an authorized dealer.

What To Do If A Manufacturer Does Not Respond

A consumer who has a legitimate claim under the Lemon Law has three options:

send the complaint to the manufacturer's informal dispute settlement program;
apply to the Lemon Law Unit to request a hearing before an administrative law judge ("ALJ"); or
file a lawsuit in the Superior Court of New Jersey.

Resolution By The Manufacturer

Many manufacturers have their own programs to attempt to resolve your complaint. You do not have to use them, but if you think you have a clear case, this is the least formal way to resolve your complaint. If you choose to use the manufacturer's dispute resolution program, you are not bound by the manufacturer's determination if you are not satisfied with the result.

If you are dissatisfied with this approach, you may file your complaint with Consumer Affairs' Lemon Law Unit.

How To File A Complaint

If you decide to take your complaint to Consumer Affairs, you must fill out an application form provided by the Lemon Law Unit and return it to the Unit with:

copies of all paperwork associated with the purchase or lease of the vehicle;
receipts for all repairs;
any correspondence with the manufacturer.

The Lemon Law Unit reviews the paperwork and determines whether the claim is covered by the law. As discussed in the preceding pages, your car may be used, too old or have too many miles on it to be covered. Or you may be seeking a claim for a repair you needed because of an accident or for some minor problem. The Unit provides the initial screening of your claim. If the transaction is covered by the Lemon Law, you will pay a $50 filing fee. If you win the case, you will get your $50 back from the manufacturer.

If the Unit has received the fee and has determined that you qualify under the Lemon Law, Consumer Affairs will schedule a hearing before an ALJ, within 20 calendar days after the complaint is accepted.

The 20-day limit is prescribed by law. You do not need an attorney for the hearing, although many consumers choose to hire one because the manufacturer must be represented by an attorney. Consumer Affairs does not provide consumers with an attorney and does not send a representative to hearings. Consumers who win are reimbursed for legal fees by the manufacturer.

Choosing To Go Through Consumer Affairs

An ALJ gives the consumer and manufacturer one last chance to resolve their dispute before the hearing starts. Approximately 75 percent of the Lemon Law cases are settled at this point. If a settlement is not reached, the ALJ will hear the case and will issue a decision within 20 calendar days. The Director of Consumer Affairs then has15 calendar days to accept, reject or modify the ALJ's decision. If no action is taken, the ALJ's decision becomes final. If a consumer wins his or her case, he/she wins a refund, payment of reasonable legal costs, application fees and compensation for repair costs.

Consumer Complaints: A 10-year Snapshot

Winners and Losers

Not every citizen who calls Consumer Affairs has a valid case. Some of the inquirers had waited too long to make a claim, or they complained about a used car when New Jersey had only a New Car Lemon Law program. Five percent of the inquiries received over the past 10 years materialized into filed complaints. Of the 7,085 consumers who filed complaints, 3,123 consumers 3 -- almost half of the complainants -- had a prima facie case; that is, they owned or leased new vehicles which had fewer than 18,000 miles or were less than two years old and appeared to have some significant problem which impaired the use, value or safety of the vehicle. The remaining cases involved consumers who either did not meet the eligibility requirements, did not pay the $50 filing fee, or who had dropped or settled their cases with manufacturers before the Lemon Law Unit was able to provide assistance.

Most of these cases were settled in favor of the consumers before an administrative law judge ("ALJ") heard the case. In fact, more than three-quarter of the cases (75.2 percent) - 2,349 cases - were settled before the ALJ had an opportunity to hear and rule on the cases. It would be fair to say that these cases represented more easily solved and clear-cut issues. The remaining quarter of the cases represented less clear-cut facts. Of these more difficult cases, more than half were decided in favor of the manufacturer. The remaining cases were either decided in favor of or withdrawn by the consumers. Added together, consumers prevailed in almost eight out of 10 claims they filed and manufacturers prevailed approximately 20 percent of the time.

Show me the Lemon...

What is the "average" Lemon Law complaint? An examination of the 10 years' 3,123 filed cases reveals that problems with brakes, transmissions and water leaks have dominated Lemon Law complaints. These three categories account for more than one-third of the Office of Administrative Law's ("OAL") cases. Brake defects (399 cases) and transmission problems (397 cases) together account for 26 percent of the cases, with each individually accounting for 13 percent of the cases. Following closely behind are cases involving water leaks in cars. Ten percent (325 cases) of the Lemon-Law-related matters referred to OAL involved complaints about water leaks. Steering problems - 6 percent of consumer complaints - and problems with stalling - also 6 percent of the complaints - round out the top five areas of complaints referred to the OAL. Together, these five categories accounted for 48 percent of all OAL cases. Rounding out the top 10 categories are: noises (6 percent); electrical problems (6 percent); paint jobs (3.5 percent); air conditioning (3 percent); and drifting (3 percent). The top 10 categories account for more than 70 percent of the cases sent to the OAL.

*3- Source: Office of Administrative Law's docket logs

Office of Administrative Law Cases
Broken Down By Nature of Complaint

Nature of Complaint	Number of Complaints	Percentage of Complaints
Brake Problems	399	13
Transmission Problems	397	13
Water Leaks	325	10
Stalling	192	6
Steering	202	6
Noises	191	6
Electrical Problems	178	6
Paint Problems	109	3.5
Air Conditioning	89	3
Drifting (left/right)	104	3
Vibrations	106	3
Oil/Gas Leaks	80	3
Idling	64	2
Starter	82	3
Odor	88	3
Miscellaneous	517	16.5
Total	3,123

Consumer Complaints
(from March 1989 to March 1999)
7,085

Cases Scheduled before the Office
of Administrative Law
(from March 1989 to February 1999)

Overall total of cases referred to the Office of Administrative Law 3,123

Prehearing settlements	2,349	75.2 percent
ALJ cases resulting in restitution	135	4.3 percent
ALJ cases resulting in dismissals	406	13 percent
Withdrawals	233	7.5 percent
Total of cases referred to OAL	3,123

Regulatory Changes

One of the reasons Consumer Affairs is required to make this report is to advise the Legislature of any changes that experience suggests should be made to the Lemon Law. The first report included several recommendations. Six suggested changes became reality after the report was published.

The recommendations were:

1. Allow for exceptions to be filed: Consumer Affairs requested that regulations be adopted that would give consumers the opportunity to file exceptions to an administrative law judge's decision. The law now allows consumers to file formal exceptions within eight days of a decision. The exceptions are limited to three typed pages. The rule is outlined in N.J.A.C. 13:45A- 18.2(a).

2. Expand the time to review a decision:

(a) The time that the Director of the Division of Consumer Affairs is allotted to review an administrative law judge's decision was expanded from 10 days to 15 days. By law, the ultimate decision rests with the Director, who is given the review period to accept, reject or modify it. The 15-day period includes weekends, holidays and vacation time. The Director can designate someone else to make the decision during extended absences. See, N.J.A.C. 13:45A-26.12 (a) and (b).

(b) The amount of time that the administrative law judge has to render a decision was expanded from 15 to 20 days. The intent of this change was to allow a more reasonable turnaround time in order to help the judges manage a very heavy caseload. See, N.J.A.C. 13:45A-18.1(a)

3. Title branding: Manufacturers now must brand the titles of cars returned to them as lemons. The brand indicates to the consumer that the vehicle had been the subject of a Lemon Law proceeding. This change discourages manufacturers from settling a Lemon Law case in one state and then reselling the car as "used" in another. See, N.J.A.C. 13:45A-26.3(b) 1-5.

4. Consumer collection of expert fees: The law was amended to include a provision allowing a consumer who prevails in his or her Lemon Law dispute to collect reasonable expert fees from the manufacturer. See, N.J.A.C. 13:45A- 26.11(a) 31v.

5. Manufacturer arbitration and buy-back programs: Manufacturers now have to supply Consumer Affairs with information on their private arbitration and buy-back programs, giving Consumer Affairs the ability to examine the impact of the Lemon Law program. See, N.J.A.C. 13:45A-26.14(c)1.

"Everything can be improved," Clarence Walker Barron once said. After careful consideration of how the Lemon Law, while the epitome of a successful State program, can be strengthened to provide even greater protection to New Jersey's citizenry, Consumer Affairs respectfully submits the following list of worthwhile initiatives for the Legislature to consider:

Extend the mileage under the "term of protection" from 18,000 miles to 24,000 miles. According to a nationwide personal transportation survey conducted by Oak Ridge National Laboratory, the average motorist now drive in excess of 16,000 in the first year of purchase. In light of this, the staff within Consumer Affairs' Lemon Law Unit believes that most consumers never reach the two-year limit for the Lemon Law coverage, but have reached their 18,000-mile limit around the first 14 months of use. An extension of the time limit to 24,000 would match the two-year time limit set by the current law. New Jersey would also join several other states, including Texas, Washington, Hawaii, Arizona, Arkansas and Florida in offering the extended time limit.

Amend the New Jersey Motor Vehicle Warranty Act to include a "serious-safety-hazard nonconformity" provision. Several other states have such a provision in their statutes which allow consumers to file a claim under their respective lemon laws after one failed attempt to repair a defect that is potentially life threatening.

Amend the "Lemon Law Rights Notification" provision to include more information, especially with respect to the mileage and time limits as defined under the "term of protection." Although dealers are required to provide consumers with a statement at the time of purchase notifying consumers of the Lemon Law's existence, dealers are only required to inform consumers that they can file Lemon Law claims with Consumer Affairs' Lemon Law Unit. To achieve a greater level of protection for all purchasers of new vehicles, more information should be included within the statement. For example, the notification should include the term of protection which clearly states the time and mileage limits outlined under the law. Dealers should also be required to include the name and address of the manufacturer's representative to whom correspondence can be sent. This is especially important information for consumers to have when they are sending out a final notification letter informing a particular manufacturer that it has one final chance to repair a defect before the matter is referred to the Lemon Law Unit of the Division of Consumer Affairs.

Conclusion

For thousands of New Jerseyans who have purchased new cars, only to find them more problematic than some older-model cars, the Lemon Law has been the answer.

Cathy Passeretti once told The Home News after filing a successful claim with the Unit against Chevrolet Geo: "I got just about everything I had put into the car back, plus the interest paid on the loan for the past year or more. I was very happy with the settlement and the way the Lemon Law worked." After 10 years and more than $30 million in restitution and relief obtained for consumers, we believe the rest of New Jersey's citizens can be, too.

The Lemon Law Expands

Because of the overwhelming success of the New Car Lemon Law, Consumer Affairs implemented (in 1996) two additional Lemon Laws governing motorized wheelchairs and used cars. Today, eight states (New Jersey, Connecticut, Hawaii, Massachusetts, Minnesota, New York, Rhode Island and Nevada) have adopted Lemon Laws for used cars; and 16 states, including New Jersey, have laws in place for purchasers of motorized wheelchairs.

The Wheelchair Lemon Law

In February 1996, the Wheelchair Lemon Law took effect, extending consumer protection to New Jerseyans who buy or lease motorized wheelchairs. At an average cost of $13,000, motorized wheelchairs can be as expensive as some new cars.

The law covers motor-driven wheelchairs and scooters, as well as retrofit power units intended to motorize wheelchairs that are purchased or leased in New Jersey. The law also requires all manufacturers of motorized wheelchairs to provide their customers with a minimum one-year warranty. Any consumer who believes he/she has purchased a "lemon" must first notify the manufacturer and make the wheelchair available for repairs.

To qualify under the Motorized Wheelchair Lemon Law, the defect must substantially impair the use, value or safety of the wheelchair. This law does not cover defects caused by accident, vandalism, abuse or neglect, and it does not cover defects caused by attempts to repair or modify the wheelchair by a person other than the manufacturer, its agent or an authorized dealer.

Consumers may seek restitution:

If a manufacturer has attempted to fix the same defect three or more times, without success, and
If the wheelchair has been out of service for 20 or more cumulative days.

Since the passage of the law, 32 consumers have complained to the Lemon Law Unit. So far, seven of the 32 consumers informally resolved their complaints before the cases reached the OAL. Of the remaining cases, 14 consumers were ineligible because their wheelchairs were purchased before the law's effective date or they filed their complaints after the one-year warranty period. Eight consumers dropped their claims. Three cases are pending.

Used Car Lemon Law

On July 3, 1996, consumers who purchased used cars from dealerships became protected under New Jersey's Used Car Lemon Law.

The law, signed by Governor Whitman in January 1996, requires used car dealers to provide their customers with warranties based on the car's mileage.

Cars that are purchased for less than $3,000 or through private transactions are not covered. Likewise, used cars that have been declared total losses by insurance companies, that are more than seven model years old and that have more than 100,000 miles on them, are also not covered.

Dealers selling used cars now are required to provide one of the following:

A warranty lasting at least 90 days or 3,000 miles, whichever comes first, on cars that have 24,000 miles or less on the odometer.
A warranty lasting a minimum of 60 days or 2,000 miles, whichever comes first, on cars that have more than 24,000 miles but less than 60,000 miles on the odometer.
A warranty lasting at least 30 days or 1,000 miles, whichever comes first, on cars that have between 60,000 and 100,000 miles on the odometer.

Consumers may seek restitution if the car is out of service for 20 or more cumulative days while the dealer is attempting to fix the vehicle, or if the dealer has made three or more attempts to repair a similar defect without success.

A little more than two years have passed since the passage of the Used Car Lemon Law ("UCLL"). During the time period between July 1996 and December 1998, 9,704 consumers called Consumer Affairs with questions about the law, how it works and whether they qualified under the law.

The vast majority of those callers did not qualify under the UCLL because many of the used cars were either purchased before the law's effective date of July 3, 1996, or they simply did not meet the criteria outlined in the law.

Of the 9,700 inquiries received by the Unit during the first two and one-half years of the Used Car Lemon Law's existence, 330 yielded filed complaints. Most claims were sent to Consumer Affairs' Consumer Service Center, local Consumer Affairs offices throughout the state or Consumer Affairs' Alternative Dispute Resolution Unit ("ADR") for assistance.

Fourteen consumers settled with dealerships without the matter being referred to the OAL. Another 18 cases were referred to the OAL. Nine of these were heard by an ALJ. Three cases are pending; three were withdrawn by the consumer; and another three were settled before the ALJ heard the case. Of the nine cases heard by an ALJ, four resulted in the consumers receiving monetary awards or replacement vehicles, while five cases were dismissed by the ALJ. In total, $72,038 in restitution was awarded to consumers who purchased used cars.