Lemon laws: 7 questions about a consumer protection law Canada doesn't have

Canada doesn't have real lemon laws for faulty cars like the U.S. has. But consumers do have avenues they can take if they feel they have a defective motor vehicle, whether they purchased it new or used.

BMW's Mini Cooper owner hit with $10K engine repairs

8 years ago
Duration 2:38
Consumer advocate calls for 'lemon laws,' saying provinces fail to protect car buyers

Canada doesn't have real lemon laws for faulty cars like the U.S. has. But consumers do have avenues they can take if they feel they have a defective motor vehicle, whether they purchased it new or used.

Yasmina Bursac purchased a used 2010 Mini Cooper S in July 2013, which ended up with a blown engine after she had owned it for a year. The engine only had 64,000 kilometres on it at the time.

Bursac says the problem resulted from a failed vacuum pump and that Canadian law offers her little protection.

The manufacturer offered to pay 60 per cent of the estimated $10,000 repair if the work was done at its dealership, but Bursac felt that wasn't enough.

Yasmina Bursac bought her used 2010 Mini Cooper S from a Volkswagen dealership in Mississauga, Ont. in July 2013 for $21,000. (Yasmina Bursac)

Derek Kreindler, managing editor of the automotive industry blog "The Truth about Cars" says consumers would benefit if Canada had lemon laws.

Even though today's cars are more reliable, he points out that they are also more complex, so "the risk is really of some kind of expensive failure of a system, rather than just a minor failure as in the past."

What is a lemon law?

A U.S.-style lemon law provides consumers with legal recourse should they purchase or lease a motor vehicle that later turns out to be defective.

For the law to apply, the vehicle, whether new or used, needs a warranty that it will be free of defects for a set time period and/or distance driven. Bursac's Mini was off warranty so she probably would not have been able to avail herself of a lemon law even if there had been one in her province.

Usually the lemon law says the problem must be substantial. If unrepairable, the law requires the manufacturer to replace the vehicle or refund payment.

When is a vehicle considered a lemon?

"A 'lemon' is a term often used to describe a vehicle with a manufacturer's defect that may affect its safety, use or value," according to Industry Canada.

When the manufacturer or a dealership has been unable to repair the vehicle after it has been in the repair shop an unreasonable number of times (three or more times, according to consumer advocates), or a set number of days, it usually gets the lemon label.

The origin of the term lemon as a reference to a substandard article dates back over a century, as in the British slang, "to hand someone a lemon." (Julie Van Rosendaal)

Lemon laws actually do use the term "lemon." Its origin as a reference to a sub-standard article dates back over a century, as in the British slang, "to hand someone a lemon," according to the Online Etymology Dictionary.

As a term for cars, it may be traced to a 1960s Volkswagen ad, which used the phrase, "We pluck the lemons."

What lemon laws are on the books in Canada?

Canada does not have a federal lemon law. Nova Scotia and Manitoba have passed laws that refer to lemons, but do not actually fit the bill, according to Kreindler.

Both provinces would require a car dealer to provide would-be purchasers with information about the vehicle's past, rather than provide consumer protection should the vehicle turn out to be a lemon.

N.S.'s law would require dealers to brand "a defective or damaged vehicle as a lemon," and provide a would-be buyer with that information. But while it passed in 2010, it has yet to be proclaimed..

Manitoba's law, which took effect at the end of 2011, requires dealers to disclose if the vehicle was declared a lemon in another jurisdiction.

What's the story in the U.S.?

Every American state has a lemon law. California took the lead, passing the Song-Beverly Consumer Warranty Act in 1970.

Since 1975, U.S. courts have been allowed to award legal fees when a consumer filed a lawsuit to enforce a warranty.

What is the Canadian motor vehicle arbitration plan?

CAMVAP is an auto industry program that provides arbitration, funded by the plan, for car owners or lessees in a dispute with a manufacturer.

It covers about 90 per cent of vehicles sold or leased in Canada, and manufactured within the previous four years.

An independent arbitrator fairly quickly conducts a hearing and issues a binding decision. But the consumer pretty much gives up their right to go to court if they participate in CAMVAP.

In its own words, "CAMVAP allows both the consumer and the manufacturer the opportunity to resolve the issue in front of an independent arbitrator without the cost and delay that often accompanies court action."

The arbitrator rules whether the manufacturer has liability and if so, whether the manufacturer should buy back the vehicle, repair it, pay for prior repairs, and pay for the consumer's out-of-pocket expenses.

How effective is CAMVAP?

Kyle Rees is the provincial NDP President, and a lawyer. He led the vetting process for candidates in this year's election. (CBC)

Out of 238 rulings listed by CAMVAP for 2013, the arbitrator decided the manufacturer had no liability in 75 claims, had to buy back the vehicle in 81 awards, had to repair the vehicle in 49 situations and had to reimburse the consumer for repairs in another 10 claims. It made other rulings as well.

Elaine Snow of St. John's has won five awards through CAMVAP concerning her 2009 Ford Escape, but she's still fighting with Ford. She says the problems began with her SUV losing power on the highway. Under the last award, Ford was supposed to repair the vehicle again and have it back to her last week, but her lawyer Kyle Rees says it's still in Ford's garage.

Rees says CAMVAP has no real enforceability, but he does say the idea behind the program is excellent.

However, he says, for vehicle manufacturers, the message from Snow's case "is that you can jerk a consumer around for as long as you like and there's nothing they can do other than get another identical arbitration award, which they then don't have to follow."

CAMVAP hadn't responded to CBC's request for comment before this story was published. 

Reached afterwards, general manager Stephen Moody said that if a manufacturer does not successfully or properly carry out an arbitrator's order, CAMVAP will provide the consumer with financial assistance to seek enforcement through the courts, including paying lawyers' fees.

What else can a Canadian consumer do if they believe they bought a lemon?

The consumer can take the manufacturer to court, even small claims court.

Rees would recommend that option over CAMVAP, based on his experience with Snow's Ford Escape, "even though CAMVAP is supposed to be a cheaper and faster process."

If the issue is safety-related, the consumer may be able to get Transport Canada to investigate.

For used cars, consumers may be able to avoid ending up with a lemon by getting a vehicle history report, which should provide the repair history.

If you are considering purchasing a used vehicle, get the vehicle identification number (VIN) and check it out before you do.

Vehicle history reports from CarFax and CarProof showed matching information for cars from Manitoba, Ontario, Quebec and the United States, but reports for cars originating in Saskatchewan, Alberta and British Columbia showed variations in data, the CBC News I-Team has found. (Donna Lee/CBC)

Kreindler notes that if the repairs were done without an insurance claim and paid for in cash, that likely won't show up in the records. He says that researching the history is still a good idea, but he also recommends getting your own mechanic to check out the vehicle.

And a CBC News investigation last year found that one of two big companies providing the repair reports, CarFax, sometimes lacks key information that the other company, CarProof, has in their reports.

The CAMVAP website provides information by VIN for any vehicles bought back by a manufacturer under its program.

You can also contact CBC's Go Public to see if they will look into your story.