Origin of Lemon Law
The origin of the lemon law is an interesting story. According to the Online Etymology dictionary, the British used to use the term “lemon” to refer to both a fruit and to a product of substandard quality. America started using the term lemon in 1909 to refer to something worthless. Fast forward to 1960, it became common to refer to worthless used cars as ‘lemons’. Today’s lemon laws are most enforced at the state level but have a federal act as a backbone for each one. This act is called the Magnuson-Moss Warranty Act, often dubbed the lemon law.
The first lemon law in the country was passed in Connecticut by John J. Woodcock III. According to his records, a resident of his district claimed to have bought an automobile for 7,000, but it turned out to be a ‘classic lemon.’ The warranty he bought with his car had loopholes which allowed the seller to get away with selling ‘lemons’ at ‘good’ car prices. Quickly after, dozens of people followed the original protest which got the first lemon law passed. The lemon law actually does not force a car to live up to a certain standard to be sold. Consumers can still be duped into buying a lemon. However, there are certain rules and standards that warranties must comply to if being sold alongside a used car.
This history of the lemon law is fairly intriguing. In class, we looked at the value distributions of good cars, medium cars, and lemons. However, in today’s society, the most thing to look for are the warranties. People are very quickly dissuaded from buying a used car if it is not backed by the lemon law. And producers do not want to back their lemons with warranties because that would be incredibly unprofitable/cause legal issues. Even selling medium cars could be unprofitable when it comes to the industry standard warranty. It’s a very clever solution to the used car market and shows how much a seller actually values the car.
https://web.archive.org/web/20130317083941/http://uscode.house.gov/download/pls/15C50.txt