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'Lemon' cars needs their own laws, legal groups say

by September 2, 2016 General

In submissions to a review of Australian Consumer Law made public this week, groups such as Legal Aid NSW, West Justice, and the Consumer Credit Legal Service all called for the laws.

Countries like the United States and the United Kingdom already have lemon laws which cover the sale of new cars.

They typically set limits to the number of faults a new car can have, the number of unsuccessful attempts to fix a problem, and the number of days a new car can be off the road for repairs.

West Justice, which primarily gives legal assistance to new migrants, said the purchase of a “lemon” car could be highly detrimental for people living in outer suburban areas.

The organisation’s Denis Nelthorpe said lemon laws were needed to cover new and second-hand cars.

“The common problem we see is that a consumer will buy a vehicle based on an assurance from a caryard that it is mechanically sound and that it’s in good condition, only to find that it has all sorts of problems,” he said.

“The cost of repairing the vehicle is disproportionate to the sale price.

“In the end it’s not very hard for a car yard to sell a poor quality vehicle to an unsuspecting consumer.”

In the US, most states have some form of a lemon law to protect car buyers when they have purchased a vehicle that is defective beyond repair.

These laws mostly apply to new cars, but in some states they also cover used cars.

Zac Gillam from the Consumer Action Law Centre (CALC) said Australia should follow Singapore’s model, and make broader changes to consumer law.

“They reverse the onus of proof, so if a consumer buys a good and within six months of the purchase of that good it’s defective, they could return that good to the retailer and the presumption is that the good was defective,” he told the ABC.

“It is up to the retailer to show the good is not defective when it was sold.

“In the Australian system and most systems, the onus lies on the consumer to show that the good was defective.”

Call for motor disputes tribunal

CALC has also used its submission to argue for a tribunal to be set up to deal specifically with disputes about vehicles.

“That’s because it’s such a specialised area, and it’s really difficult for generalist tribunals who don’t have expertise in motor vehicles, to effectively adjudicate those disputes,” Zac Gillam said.

“They have a system like that in New Zealand, and we believe we should adopt that in conjunction with the broader Singaporean idea of consumer guarantees.”

In their submissions, the Australian Automotive Dealer Association and the Motor Traders Association of Australia (MTAA) dismissed the calls for lemon laws in Australia.

Both organisations said lemon laws should not be introduced because current laws already provided significant consumer protections.

No evidence lemon laws would work: motoring groups

Richard Dudley from MTAA said there was no “empirical basis” for an argument for lemon laws.

“Even if you look at the United States, they introduced lemon laws at a time when few other consumer protections existed,” Mr Dudley told the ABC.

“One of the problems they have now however is there’s no clear definition of what constitutes a lemon and that interpretation varies widely and so does the actual law itself, it varies considerably among state jurisdictions and that applies in Europe as well.”

Mr Dudley also said a tribunal was unnecessary.

“The tribunals work reasonably well under Australian Consumer Law so one wonders is this just not going to be yet another cost burden to both the industry and to consumers when those avenues are already available?” he said.

“Our concern is we’re talking about an 18-million-strong car park in this country but no report has been able to quantify the level of the problem that would require this sort of legislative response.”

Choice calls for two-year deadline for new law

Earlier this year, a survey by consumer group Choice found two-thirds of new car owners faced problems with their cars.

Choice’s submission to the ACL review calls for a taskforce to be set up to investigate and report on compliance with the consumer guarantees regime across the motor vehicle industry.

“If this fails to resolve the problems in the industry within two years, governments should introduce industry-specific lemon laws,” Choice spokesman Tom Godfrey said.

“We’d also like complaints about motor vehicles published on a central database, and report on the number of complaints received and resolutions reached.”

Last year, a Queensland parliamentary committee found nationally consistent laws were needed to ensure better protection for consumers who buy faulty or “lemon” new cars.