Maine: Resisting the Lure of Extended Warranties

Posted by Sergei Lemberg, Esq. on January 6th, 2009

The former Director of the Maine Lemon Law program, Carol Roberts, wrote an excellent piece for the Kennebec Morning Sentinel about Maine’s consumer warranty laws and the uselessness of extended warranties. She notes that Maine law provides for an implied warranty that “protects most goods and services for up to four years if the product is seriously defective, is still within its useful life (meaning it has not worn out), and has not been abused.”

She goes on to say that extended warranties are really service contracts, for which Americans spend $16 billion each year, and that provide sellers with a 40-80% profit margin.

Next time you think about buying an extended warranty, it’s worth your while to look into your state’s consumer protection laws and see if it’s really necessary.

A Lemon by Any Other Name Still Tastes Sour

Posted by Sergei Lemberg, Esq. on November 20th, 2008

When a Maine car dealer sold Cynthia Musk Fontanez a 2003 Saab 9-3, she signed a “GM Resale Disclosure of Nonconformity,” – but didn’t realize that meant it was a lemon. In an all-too-common occurrence, the vehicle was a California buyback and was titled as a lemon in that state, but was then somehow transported to Maine, a state that has more lenient titling requirements.

According to the Morning Sentinel, Fontanez began having problems with the Saab, and brought the car in for numerous repairs – to both a Portland dealership and to the Skowhegan dealership that sold the car.

Eventually, Fontanez demanded a buyback, and when the dealership refused, she brought a $120,000 lawsuit against the dealer, citing emotional damages and fraud. The court threw out all but one complaint. The Morning Sentinel reported that “The remaining question before the court is whether not telling the Fontanezes the car was a lemon was deceptive and in violation of Maine’s unfair-trade practices act.”

The dealer claims that he met the requirement of the law because the document that Fontanez signed said that the vehicle was repurchased by GM “as a result of a voluntary settlement of a state-run arbitration or court proceeding.” The judge ruled that the Maine Used Car Information Act wasn’t specific about the verbiage, but found that the intent of the law was that the disclosure should use the word “lemon.” According to the Morning Sentinel, the judge wrote, “Without that word, the disclosure loses most, if not all, of its impact as a consumer alert.”

It seems that at least one Maine state legislator has taken notice of this case – and is planning on taking action. The Kennebec Journal Morning Sentinel reports that State Senator Joseph C. Brannigan – the legislator who sponsored Maine’s lemon law – is planning to introduce legislation that amends the law to mandate car dealers to identify a lemon as such when they sell it in Maine.

We couldn’t agree more that the state’s lemon law needs to be strengthened. In addition, this case speaks to the necessity of a national lemon buyback database, so that consumers can look up a used car and see if it was subject to lemon law complaints. This is a classic case of title washing, and should be treated as such.