Dan Regan – CPTD – TiER1 Principal / Learning Strategist
As lemon law claims surge and buyback cases mount, even the most quality-focused automotive brands are getting squeezed.
For one OEM we work with, the pyramid has flipped—they now lose more lemon law cases than they settle, with legal and buyback costs upwards of $75 million. And they’re not alone.
In our new industry insights paper, When Life Gives You Lemon Laws, we explore the root causes behind this alarming trend—and more importantly, what OEMs, dealerships, and service professionals can do about it. Here’s a brief overview.
Why Are Lemon Law Risks for OEMs on the Rise?
Clearly, modern vehicles are more complex—and customer expectations are higher—than ever. But the story goes deeper.
- Cars Are Too Complex to Feel Simple
The JD Power Initial Quality Study shifted a long time ago: more complaints now stem from Hard to Operate and Difficult to Understand features than from mechanical failures. In short, clunky infotainment systems or confusing Bluetooth pairings are treated just as seriously as engine trouble. In the eyes of the customer—and the law—a “fault is a fault.”
- Revenge Buying Has Turned Into Regret
Post-pandemic spending sprees led some to purchase vehicles they might not have bought otherwise. Now, stuck with high payments and mixed feelings, some owners are looking for a way out. Lemon law litigation is one path.
- Attorneys Have Found a Niche
Lemon law litigation has become a booming business. A quick search for lemon law attorneys in any city returns pages of results. Legal firms are targeting OEMs with aggressive strategies, often escalating minor complaints into expensive settlements.
- California Is Ground Zero
Although only 16 percent of one OEM’s vehicle sales occur in California, over 80 percent of their lemon law cases originate there. With California frequently setting national consumer trends, what’s happening on the West Coast may be headed your way.
How to Spot Lemon Law Risk Before It’s Too Late
In the full paper, we introduce the “2-3-30 Rule,” a simple but powerful framework to identify red flags early:
- [2] A vehicle returns a second time for a safety-related issue
- [3] A third visit occurs for the same or similar issue
- [30] The car is off the road for a cumulative 30 days—regardless of fault
Recognizing these patterns early can prevent costly escalation.
Preventing Lemon Law Claims: Practical Actions
The paper outlines several strategies to reduce risk and build customer trust, including:
- Use clear, factual language in repair order documentation
- Stock high-risk parts to avoid unnecessary delays
- Don’t hesitate to expedite shipping when a case is at risk
- Leverage OEM goodwill budgets and customer service tools to protect the relationship
Download the Full Insights Paper
Download When Life Gives You Lemon Laws
This paper includes:
- Real examples of lemon law pitfalls and case losses
- Legal red flags service departments need to watch for
- Tactical practices to protect your brand and bottom line
Don’t let a preventable complaint become a costly legal case. Get informed and get ahead with strategies drawn from TiER1’s work across leading OEMs.
Better yet, let’s talk about it. Get in touch with one of our industry experts here.
