The used car market has seen a significant increase recently due to the global supply shortages caused by the pandemic, which has impacted the production of new cars. In order to meet rising demand, there has been an increase of used cars in the marketplace.
As the number of used car sales are increasing, there has also been an increase in demand letters delivered to used car dealerships from customers that claim they “bought a lemon.” If you receive a letter like this, it may not be cause for panic or intimidation.
These demand letters generally contain legalese, citations to statutes and cases, and may contain a threat for litigation if the dealer doesn’t agree to take back the car. An important thing to remember is that these letters are written with the intent to scare the dealership into complying with the demand. In some cases, the customer might simply be unhappy with the vehicle they bought and are looking for a way to convince the dealership to rescind the transaction and take the vehicle back. In other cases, it is possible that there are valid reasons for their complaints (such as safety related issues with the vehicle), but the customer may not understand that the law allows the dealership the opportunity to undergo a vehicle repair process under the warranty.
In Massachusetts, the consumer protection statute (MGL chapter 93A) requires unhappy consumers to send a demand letter before filing litigation in order to take advantage of the enhanced damages allowed under the statute. This statute gives the customer a lot of leverage because the company has an affirmative obligation to investigate the facts and law and determine whether the company should tender a reasonable settlement or not. If a court later agrees that the company had unfair business practices and their response was unreasonable under the circumstances, then the customer may possibly recover double or triple the amount of the actual damages plus reasonable attorney’s fees, costs, and interest. Specific to dealerships, it is common that the demand letter will allege breach of contract (and breach of the implied warranty of merchantability), as well as breach of the Magnuson-Moss Warranty Act – misrepresentations made by the salesperson – in addition to asserting violations of the consumer protection statute.
As daunting as a demand letter appears, the law provides as many protections to the dealership as it does to the customer, so long as the dealership is complying. The “Lemon Aid Law” (MGL chapter 90, §7N) in Massachusetts does allow a buyer to void or cancel a motor vehicle contract or sale, but only if the vehicle failed to pass inspection and if the estimated costs of repairs of emissions or safety related defects exceed 10% of the purchase price. Otherwise, the Used Vehicle Warranty Law (MGL chapter 90, §7N) allows three attempts to repair the vehicle and fix safety and emissions related issues so that it will pass inspection, which often is the easiest way to resolve these matters. The law does allow the dealership the right to offer to buy back the vehicle instead of making repairs, which may occasionally be the prudent approach.
If you receive a demand letter, in Massachusetts you have 30 days to respond therefore, it is important that you take action quickly. An experienced attorney can help you sort through the legalese, analyze the strength and weaknesses of the assertions in the letter, and decide what the right course of action should be. If you received a demand letter, have a customer threatening litigation, or are being harassed by an unhappy customer, and have questions about how to proceed, please contact Paula Miller at pmiller@pkboston.com or (508) 807-1131 for a consultation.
The above information is designed to provide a helpful overview of a relevant topic. It does not constitute legal advice nor should it be construed as such. Please do not take action based on the above information without seeking formal legal advice.
