Auto Dealer Fraud vs Lemon Law: Know the Difference

In the legal world, the way you label your case can be the difference between meaningful relief and a motion to dismiss. It’s important to know ahead of time whether what you are dealing with is auto dealer fraud vs lemon law. It can affect your claim, and the remedies available when things go wrong.

Auto Dealer Fraud Usually Happens on the Lot

Both auto dealer fraud and lemon law are forms of consumer protection connected to car sales. But in most cases, they are separate and distinct legal claims. Auto dealer fraud includes a variety of unlawful and deceptive practices by automotive dealers during the vehicle purchase. That means they generally happen on the lot at the dealership. You may be the victim of auto dealer fraud if the dealer:

• Uses false advertising
• Tells you that the advertised vehicle is gone or now costs more and pressures you into a more expensive or less desirable purchase
• Doesn’t disclose interest or other costs rolled into your monthly payment
• Fails to disclose important details about your used vehicle, like its accident history, use as a rental vehicle, or that it was “salvaged” or flood-damaged
• Alters the vehicle to make it more appealing, including rolling back the odometer
• Offers yo-yo financing and then demands you pay more or return the vehicle when the “preapproved” deal falls through

Lemon Law Problems Happen After the Deal is Done

By contrast, the problems covered by Michigan lemon law generally don’t appear until weeks or months after the sale is complete and the vehicle leaves the lot. Legally speaking, a “lemon” is a new (or sometimes used) vehicle delivered with a manufacturer's warranty that continues to have the same mechanical problem even after several repair attempts. The mechanical problem must substantially affect the way you use the vehicle or its resale value. Alternatively, a vehicle that spends 30 or more days or parts of days (including a 5-day "last chance" window) during the first year of lease or ownership for the same or different problems also qualifies as a "lemon". The problem is often a manufacturing defect which may be the subject of a vehicle recall or could be isolated to only your vehicle.

Auto Dealer Fraud vs Lemon Law: Why Does it Matter?

The legal differences in auto dealer fraud vs lemon law litigation are big enough that choosing the wrong type of lawsuit can cause your case to be dismissed. In an auto dealer fraud case, you and your consumer protection attorney must demonstrate:

• The dealer made certain representations or withheld material information it had a duty to disclose
• Those representations were false, misleading, or coercive
• The person or company making the representations knew they were false at the time
• You suffered damages and had to pay costs because of the auto dealer’s fraudulent behavior.

In lemon law, what really matters is what happened in the year after the purchase or lease agreement was signed. While the warranties (promises) made by the manufacturer are important, the terms of sale aren’t involved. Instead, you and your lemon law attorney will have to show that:

• The manufacturer provided a written warranty covering the vehicle 
• The vehicle was serviced more than three times for the same issue,or accumulated more than 25 days or parts of days out of service due to repairs
• The issue affected your use of the vehicle, substantially reduced its value, or cost you money to have the issue addressed unless you are relying on the days out of service -- in that case, the time out of service alone substantially affects your use of the vehicle.

There are some cases where auto dealer fraud and lemon law violations happen connected to the same car. If that happens, you and your lawyer can bring a lawsuit raising both claims together. In either type of case you can seek compensation for your losses. You may also be compensated for the differences between what was promised and what was delivered. In some cases, your vehicle could also be replaced, and you may be entitled to recover attorney fees and costs for the trouble of taking the matter to court.

In deciding between auto dealer fraud and lemon law claims, the key is often in whether the problem happened at the dealership or arose after the fact. Distinguishing between the two types of lawsuits can be difficult. You need an experienced lemon law lawyer with experience in auto dealer fraud to help you file and prove your case, so you can get back on the road.

Dani K. Liblang is a lemon law attorney at The Liblang Law Firm, PC, in Birmingham, Michigan. She represents consumers who purchase defective vehicles or were the victim of auto dealer fraud. Contact The Liblang Law Firm, PC, today for a consultation.