Is Your Vehicle a Lemon or Not Living up to Its Warranty?

What owners of defective cars need to know about the informal dispute resolution process

By Doug Mentes, Esq. | Reviewed by Canaan Suitt, J.D. | Last updated on November 27, 2023 Featuring practical insights from contributing attorney Scott M. Cohen

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New vehicle owners seeking relief for breach of their vehicle warranty or under state lemon laws are often required to first submit their claim to the manufacturer-funded informal dispute resolution process (IDR). Failure to do so may bar relief to the owner from either the vehicle manufacturer or the courts.

Under the federal Magnuson-Moss Warranty Act, new car manufacturers are required to offer the IDR process to vehicle owners still under their manufacturer’s warranty. That law also requires new motor vehicle owners with warranties to use this process before filing a lawsuit for consumer protection. If an owner discovers the defect during the warranty period of the vehicle, they may have a claim against the manufacturer.

Scott M. Cohen is an experienced consumer law attorney in Northbrook, Illinois, who has handled many breach of written warranty and lemon law claims. Many of his clients have had their cases challenged by manufacturers, and he suggests contacting an attorney even prior to the dispute resolution process.

How to Start the Dispute Resolution Process

There may be no more important part of the process than properly making a claim before the deadline for lemon law or breach of warranty. Whether with an attorney or on their own, vehicle owners must contact the designated manufacturer representative to begin the process.

To determine who the designated representative is, owners must review their vehicle manual, vehicle warranty, and other paperwork received at the time of purchase. The representative will then provide the necessary documents to begin the claim.

It’s important that vehicle owners ensure they are dealing with the correct representative. Some owners have been misled to believe the car dealer can process these claims. They cannot, and customers who fall for this trap risk the expiration of the claim’s time period.

There are lawyers that can help. People will bring their car into the repair shop two, three, four times or more—even if it’s not fixed, they get fed up and either sell it or live with the problem. These people are not even aware there are laws that can help them in these circumstances.

Scott M. Cohen

What to Expect in the Dispute Resolution Process

Manufacturers fully fund the dispute resolution process, so there is no cost to the consumer. Plus, under the law, vehicle manufacturers are bound by the decision of the third party neutral while consumers are not. There is no risk to the consumer to participate in this process. If the claim proceeds to court, “the result is admissible at trial,” says Cohen, “however, no deference is given by the court to the decision.”

The rules for the dispute resolution process require a decision within 40 days of initiating the process. Cohen says that “typically, the Better Business Bureau or National Center for Dispute Settlement will handle the informal dispute resolution process.”

Because manufacturers fund the IDR, that creates a conflict of interest for the neutral decision-maker. It’s unknown whether that conflict affects the decision, Cohen says. “I’m not saying they are partial, but we get much better results for our clients in a court of law than we do through the informal dispute resolution process.”

Reach Out to an Experienced Attorney

Regardless of the IDP, consumers should reach out to an attorney if they are experiencing issues with their vehicle warranty.

“There are lawyers that can help,” Cohen says, adding that, often, these lawyers won’t charge fees to the consumer. “People will bring their car into the repair shop two, three, four times or more—even if it’s not fixed, they get fed up and either sell it or live with the problem. These people are not even aware there are laws that can help them in these circumstances.” 

For more information on this area of law, see our overview of consumer law and content on arbitration and other alternative dispute mechanisms.

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