The Federal Lemon Law

What is the Federal Lemon Law?

Car in Front of the Capitol BuildingIn 1975, President Gerald Ford signed the Magnusson-Moss Warranty Act into law. The primary purpose of the “Mag-Moss” Act is to ensure that consumers receive clear, complete, and accurate information about the warranties accompanying the products they buy. It also establishes specific minimum requirements with regard to certain types of warranties and ensures that remedies are available to consumers when warranties are breached.

Generally, consumers who think that they have a “lemon” car or truck should first talk to a local attorney to find out if they have a claim under their home State’s warranty laws. Many States have enacted lemon laws that provide greater protection, so resort to the federal lemon law is usually a last resort for consumers who cannot obtain relief under their States’ local laws.

Click here to go back to TheLemonLaws.org home page to learn more about your State’s lemon law rules.

That being said, the federal lemon law includes many important provisions that contribute to protecting U.S. consumers. This page provides a summary of the Mag-Moss Act’s major rules, requirements, and remedies.

What Products Are Covered by the Federal Lemon Law?

The Mag-Moss Act generally applies to all sales (but not leases) of “consumer goods” that are accompanied by written warranties. Oral warranties, regardless of whether or not they are recognized under State law, do not trigger application of the federal lemon law. Goods that are purchased for resale are specifically excluded from the Act’s coverage.

Picture of SUV With Bikes on Rack“Consumer goods” are defined under the federal lemon law statute to mean products that are typically used for consumer, household, or personal purposes. However, it does not matter whether the goods are actually be used for these purposes. Thus, unlike some State lemon law statutes, the Mag-Moss Act provides protection for companies and other business entities with regard to the consumer products they purchase.

The federal lemon law also applies to subsequent purchasers who acquire used consumer goods during the warranty period – regardless of whether they are purchased in a retail or private sale. Thus, unlike some State lemon laws, the Mag-Moss Act provides coverage for used goods bought that are bought in private sales from other consumers.

What Requirements Does the Federal Lemon Law Impose For Written Warranties?

The federal lemon law imposes two sets of requirements, one exclusively for “full” warranties and another for all others, including “limited” warranties. However, as a practical matter, the full warranty rules are usually not relevant because virtually all modern companies offer limited warranties only.

One of the Act’s most important rules is that companies must clearly and prominently state the terms of their warranties. Specifically, warrantors must specifically state in their warranties:

  1. their names and addresses;
  2. which parts and systems are covered by the warranty, and which parts and systems (if any) are excluded;
  3. what the warrantor will do if a defect is found in one of its products;
  4. what consumers need to do in order to obtain repairs or other remedies under the warranty;
  5. what expenses (if any) consumers will have to bear if they seek warranty repairs;
  6. what informal dispute resolution procedures (if any) they have created for disputes under their warranties
  7. the lengths of their warranties; and
  8. how long it will take them to perform warranty repairs.

 

The federal lemon law also mandates that the terms of written warranties cannot be confusing or misleading.

Two other requirements of the federal lemon law deserve mention. First, as a general rule (and unless the warrantor has obtained specific permission to do so from the Federal Trade Commissioner) a warrantor cannot impose a condition that you use particular products or services in order to take advantage of the warranty (for example, a car manufacturer cannot require that you use its service facilities for your vehicle’s regular maintenance). Second, a seller of consumer goods is prohibited from disclaiming or limiting the implied warranties imposed by State laws if either (1) the product is sold with an express written warranty, or (2) the seller enters into a service contract with the buyer at the time of or within 90 days after the purchase.

What Remedies Are Available Under the Federal Lemon Law?

Gavel and Law BooksUnder the Mag-Moss Warranty Act, a consumer can sue warrantors, sellers, and service contract providers for any failure to meet their obligations under their written warranties, the implied warranties imposed by State laws, by service contracts, or by the Act itself. The federal lemon law statute expressly states that a prevailing consumer can recover his or her attorney’s fees, costs, and litigation expenses from the defendants. The fee-shifting provision is in many ways the heart of the federal lemon law, since it encourages consumers to enforce their rights under the Mag-Moss Act.

Lastly, it is important to remember that the federal lemon law also imposes conditions on consumers before they can file lawsuits. Specifically, if a warrantor has established an informal dispute resolution procedure and its warranty requires consumers to use it, then prior to filing a lawsuit against the warrantor a consumer must first attempt to resolve the dispute informally.

Check Your State’s Lemon Law Rules!

As stated above, State lemon laws often provide greater compensation and protection that their federal counterpart. Thus, before considering the federal lemon law you would be wise to learn about your rights under your State’s local warranty laws. TheLemonLaws.org home page is one of the Web’s best resources for lemon law information. Click here to find out more about your State’s lemon law rules.