Chrysler Ignores Lemon Laws While in Bankruptcy

Of the many hurdles involved with Chrysler’s bankruptcy, lemon law repayments have so far taken a backseat, according to a report in the Los Angeles Times. Buyers with defective vehicles that are still under warranty can’t get cash settlements. If they have them, the checks bounce.

This has created a brewing consumer-confidence problem for Chrysler at exactly the wrong time. Most state lemon laws give car buyers the right to lodge complaints if a vehicle cannot be fixed. For instance, in California, if a defect cannot be repaired after four attempts (or two, if the malfunction could endanger lives), the owner can ask for a cash payment or for the automaker to buy back the vehicle. If an automaker refuses, the individual can sue.

Now, buyers who have put the lemon law to use are standing in line behind the rest of Chrysler’s unsecured creditors. Chrysler has acknowledged the problem but has not asked for permission to pay the debts. For now, owners of lemon Chryslers can appeal to the bankruptcy judge, but lawyers involved with lemon law suits do not seem optimistic about the prospect of full settlements.

This means former Chrysler owners could be holding checks ranging from $2,000 cash payments to $40,000 buybacks that are at best worth pennies on the dollar and at worst worth nothing.

Chrysler Bankruptcy Creates Lemon Law Turmoil (L.A. Times)

Comments

Smooth move.

Wow! What a mess! Buyer beware for sure.

I'll never buy a Chrysler. A friend in Wisconsin is being subjected to this disregard for lemon laws.

It's my opinion that Chrysler will make good on all payments to consumers for rebates, settlements, warranty claims, etc. The new Fiat/Chrysler company needs all the good will available and can't afford to alienate good customers.