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Indiana’s Lemon Law, How Does It Compare? (Part 1a)

I recently read an article about the Tennessee Division of Consumer Affairs’ lemon law website. Apparently that website had incorrect information about Tennessee’s lemon law up for about four years! Tennessee’s lemon law was amended in 2003 to require three instead of four repair attempts and 15 instead of 30 days out-of-service, but the information on the website was never changed. Duuoohhhh!

Anyway, this got me thinking about how Indiana’s lemon law compares to other states’ lemon laws. Rather than comparing the entire statutes in broad terms, let’s get down to the nitty gritty and compare specific provisions. This is Part 1, of what will hopefully be a series, comparing certain provisions of Indiana’s lemon law to the corresponding provisions in other states’ lemon laws. My general, relatively uneducated impression is that Indiana’s lemon law is among the least consumer friendly in the nation, but I guess we’ll see.

In my opinion, one of the harshest provisions in Indiana’s lemon law is the manufacturer’s reimbursement for “a reasonable allowance for use.” The basic premise is that if the lemon purchaser wants his or her money back, the manufacturer should be entitled to deduct from that refund a reasonable allowance for the mileage the purchaser put on the vehicle. On it’s face, this seems reasonable, but there is a problem with the way this reasonable allowance is calculated under the statute that, in some situations, makes it unfair to Indiana consumers.

How is it unfair? Well, lemon owners can be trapped. The problem is Indiana Code 24-5-13-14. It provides that a lemon owner has the “option” of retaining the use of his lemon until he has been tendered a full refund or a replacement vehicle. But there’s a “but.” The “but” is that the mileage incurred during this time must be reflected in the reasonable allowance for use calculation (but only if the owner is seeking reimbursement). This can leave a lemon law plaintiff in a conundrum.

Joe lives close to a Kia dealership, and he buys a Kia Rio. Joe drives about 30,000 miles a year. At 15,000 miles, Joe has a pulsation problem with his brakes. He takes it to the dealership; the dealership says they fixed it but the problem recurs. Eventually, it becomes clear that Joe has a lemon. He contacts an attorney and the attorney writes a letter to Kia. Kia does not respond. The attorney then files a lawsuit on Joe’s behalf. The attorney ascertains that Joe is driving 30,000 miles a year, advises Joe that the lawsuit may be drawn out, and asks Joe if he can afford to park the car and buy another to drive. Joe can’t afford to make two car payments. The attorney knows that Joe can’t sell the car and buy another, because without the car to the return to the manufacturer, the lawsuit evaporates. The attorney asks Joe if he will accept another Kia as a “replacement vehicle of comparable value,” and Joe says no because he can’t get along with the Kia dealership any more and doesn’t want to have any dealings with them.

What can Joe do but continue driving his Rio? This is a STRONG incentive to manufacturers to drag out the proceedings, because in the meantime Joe continues to drive 30,000 miles a year (despite the headaches, hassles and danger to himself and his passengers, because he simply has no choice). Each mile Joe drives means the manufacturer will owe a little less money.

This isn’t fair and it isn’t right. It penalizes those who drive a lot of miles and those who can’t afford to park the lemon and drive another car until the manufacturer does the right thing or is forced to do the right thing.

In Part 1b, we’ll examine how some of our neighbor states handle the reasonable allowance for use calculation.

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