HB0501 95TH GENERAL ASSEMBLY

LRB095 05165 LCT 25237 b

95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
HB0501

Introduced 02/01/07, by Rep. Jim Sacia

SYNOPSIS AS INTRODUCED:

New Act

Creates the Used Vehicle Buyer Protection Act. Prohibits a used vehicle dealer from selling or leasing a used vehicle unless he or she stipulates to the consumer any mechanical or technical defects or problem history of that particular make, model, and year of that vehicle. Requires a used vehicle dealer to provide the consumer with a written warranty containing the listed terms. Provides exclusions to the warranty's coverage. Provides remedies for the consumer and civil penalties against the used vehicle dealer for failure to honor a warranty. Provides for arbitration of disputes concerning the warranty. Requires a dealer to provide the consumer with a notice of his or her rights at the time of purchase or lease of a used motor vehicle.

A BILL FOR

AN ACT concerning business.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Used Vehicle Buyer Protection Act.

Section 5. Definitions. As used in this Act:

"Consumer" means the purchaser or lessee, other than for purposes of resale, of a used motor vehicle primarily used for personal, family, or household purposes and subject to a warranty, and the spouse or child of the purchaser or the lessee if either the motor vehicle or the lease of the motor vehicle is transferred to the spouse or child during the duration of any warranty applicable to the motor vehicle, and any other person entitled by the terms of the warranty to enforce the obligations of the warranty.

"Dealer" means any person or business that sells, offers for sale, leases, or offers for lease a used vehicle after selling, offering for sale, leasing, or offering for lease 3 or more used vehicles in the previous 12-month period, but does not include:

(1) a bank or financial institution except in the case of a lease of a used motor vehicle;

(2) a business selling a used vehicle to an employee of that business;

(3) a regulated public utility that sells at public auction vehicles used in the ordinary course of its operations, provided that any advertisements of those sales conspicuously disclose the "as is" nature of the sale;

(4) the sale of a leased vehicle to that vehicle's lessee, a family member of the lessee, or an employee of the lessee; or

(5) the State, its agencies, bureaus, boards, commissions, and authorities, and all of the political subdivisions of the State, including the agencies and authorities of those subdivisions.

"Repair insurance" means a contract in writing for any period of time or any specific mileage to refund, repair, replace, maintain, or take other action with respect to a used motor vehicle and that is regulated by the Department of Insurance.

"Service contract" means a contract in writing for any period of time or any specific mileage to refund, repair, replace, maintain, or take other action with respect to a used motor vehicle and provided at an extra charge beyond the price of the used motor vehicle or of the lease contract for the used motor vehicle.

"Used motor vehicle" means a motor vehicle, excluding motor homes and off-road vehicles, which has been purchased, leased, or transferred either after 18,000 miles of operation or 2 years from the date of original delivery, whichever is earlier.

"Warranty" means any undertaking in connection with the sale or lease by a dealer of a used motor vehicle to refund, repair, replace, maintain, or take other action with respect to the used motor vehicle and provided at no extra charge beyond the price of the used motor vehicle.

Section 10. Vehicle history; written warranty required; terms.

(a) No dealer shall sell or lease a used vehicle unless he or she stipulates to the consumer any mechanical or technical defects or problem history of that particular make, model, and year of that vehicle.

(b) Except as provided for in subsection (c) of Section 20, no dealer shall sell or lease a used motor vehicle to a consumer without giving the consumer a written warranty that shall at minimum apply for the following terms:

(1) If the used motor vehicle has 36,000 miles or less, the warranty shall be at minimum 90 days or 4,000 miles, whichever comes first.

(2) If the used motor vehicle has more than 36,000 miles, but less than 80,000 miles, the warranty shall be at minimum 60 days or 3,000 miles, whichever comes first.

(3) If the used motor vehicle has 80,000 miles or more but no more than 100,000 miles, the warranty shall be at a minimum 30 days or 1,000 miles, whichever comes first.

(c) The written warranty shall require the dealer or his or her agent to repair or, at the election of the dealer, reimburse the consumer for the reasonable cost of repairing the failure of a covered part. Covered parts shall at least include the following items:

(1) The engine including all lubricated parts, water pump, fuel pump, manifolds, engine block, cylinder head, rotary engine housings, and flywheel.

(2) The transmission including the transmission case, internal parts, and the torque converter.

(3) The drive axle including front and rear drive axle housings and internal parts, axle shafts, propeller shafts, and universal joints.

(4) The brakes including the master cylinder, vacuum assist booster, wheel cylinders, hydraulic lines and fittings, and disc brake calipers.

(5) The radiator.

(6) The steering including the steering gear housing and all internal parts, power steering pump, valve body, piston, and rack.

(7) The alternator, generator, starter, and ignition system, excluding the battery.

(d) The repair or reimbursement shall be made by the dealer notwithstanding the fact that the warranty period has expired, provided the consumer notifies the dealer of the failure of a covered part within the specified warranty period.

(e) The written warranty may contain additional language excluding coverage:

(1) for a failure of a covered part caused by a lack of customary maintenance;

(2) for a failure of a covered part caused by collision, abuse, negligence, theft, vandalism, fire or other casualty, and damage from the environment (windstorm, lightning, road hazards, etc.);

(3) if the odometer has been stopped or altered such that the vehicle's actual mileage cannot be readily determined or if any covered part has been altered such that a covered part was thereby caused to fail;

(4) for maintenance services and the parts used in connection with those services such as seals, gaskets, oil, or grease unless required in connection with the repair of a covered part;

(5) for a motor tune-up;

(6) for a failure resulting from racing or other competition;

(7) for a failure caused by towing a trailer or another vehicle unless the used motor vehicle is equipped for towing as recommended by the manufacturer;

(8) if the used motor vehicle is used to carry passengers for hire;

(9) if the used motor vehicle is rented to someone other than the consumer;

(10) for repair of valves or rings to correct low compression or oil consumption that is considered normal wear;

(11) to the extent otherwise permitted by law, for property damage arising or allegedly arising out of the failure of a covered part; and

(12) to the extent otherwise permitted by law, for loss of the use of the used motor vehicle, loss of time, inconvenience, commercial loss, or consequential damages.

Section 15. Failure to honor warranty.

(a) If the dealer or his or her agent fails to correct a malfunction or defect as required by the warranty specified in this Act that substantially impairs the value of the used motor vehicle to the consumer after a reasonable period of time, the dealer shall accept return of the used motor vehicle from the consumer and shall refund to the consumer the full purchase price or, in the case of a lease contract, all payments made under the contract, including sales or compensating use tax, less a reasonable allowance for any damage not attributable to normal wear or usage and adjustment for any modifications that either increase or decrease the market value of the vehicle or of the lease contract. In the case of a lease contract, the dealer shall cancel all further payments due from the consumer under the lease contract. In determining the purchase price to be refunded or in determining all payments made under a lease contract to be refunded, the purchase price or all payments made under a lease contract shall be deemed equal to the sum of the actual cash difference paid for the used motor vehicle or for the lease contract plus, if the dealer elects to not return any vehicles traded-in by the consumer, the wholesale value of any traded-in vehicle as listed in the National Auto Dealers Association Used Car Guide, or in any other guide as may be specified in rules adopted by the Secretary of State, as adjusted for mileage, improvements, and any major physical or mechanical defects in the traded-in vehicle at the time of trade-in.

(b) The dealer selling or leasing the used motor vehicle shall deliver to the consumer a written notice including conspicuous language indicating that: (i) if the consumer is entitled to a refund pursuant to this Act, the value of any vehicle traded-in by the consumer; or (ii) if the dealer elects to not return it to the consumer, for purposes of determining the amount of the refund will be determined by reference to the National Auto Dealers Association Used Car Guide wholesale value, or any other guide as may be approved by the Secretary of State, as adjusted for mileage, improvements, and any major physical or mechanical defects, rather than the value listed in the sales contract. The notice to the consumer shall contain conspicuous language warning the consumer that failure to pay any funds owed to the lienholder within 30 days will terminate the dealer's obligation to provide a refund.

(c) Refunds shall be made to the consumer and lienholder, if any, as their interests may appear on the records of ownership kept by the Secretary of State. If the amount to be refunded to the lienholder will be insufficient to discharge the lien, the dealer shall notify the consumer in writing by registered or certified mail that the consumer has 30 days to pay the lienholder the amount that, together with the amount to be refunded by the dealer, will be sufficient to discharge the lien. If the consumer fails to make the payment within 30 days, the dealer shall have no further responsibility to provide a refund under this Act. Alternatively, the dealer may elect to offer to replace the used motor vehicle with a comparably priced vehicle, with an adjustment in price as the parties may agree. The consumer shall not be obligated to accept a replacement vehicle, but may instead elect to receive the refund provided under this Section.

(d) It shall be an affirmative defense to any claim under this Section that:

(1) the malfunction or defect does not substantially impair the value; or

(2) the malfunction or defect is the result of abuse, neglect, or unreasonable modifications or alterations of the used motor vehicle.

(e) It shall be presumed that a dealer has had a reasonable opportunity to correct a malfunction or defect in a used motor vehicle, if:

(1) the same malfunction or defect has been subject to repair 3 or more times by the selling or leasing dealer or his or her agent within the warranty period, but the malfunction or defect continues to exist; or

(2) the vehicle is out of service by reason of repair or malfunction or defect for a cumulative total of 15 or more days during the warranty period. The period shall not include days when the dealer is unable to complete the repair because of the unavailability of necessary repair parts. The dealer shall be required to exercise due diligence in attempting to obtain necessary repair parts. Provided, however, that if a vehicle has been out of service for a cumulative total of 45 days, even if a portion of that time is attributable to the unavailability of replacement parts, the consumer shall be entitled to the replacement or refund remedies provided in this Act.

(e) The term of any warranty, service contract, or repair insurance shall be extended by any time period during which the used motor vehicle is in the possession of the dealer or his or her duly authorized agent for the purpose of repairing the used motor vehicle under the terms and obligations of the warranty, service contract, or repair insurance.

(f) The term of any warranty, service contract, or repair insurance, and the 15-day out-of-service period, shall be extended by any time during which repair services are not available to the consumer because of a war, invasion or strike, fire, flood, or other natural disaster.

Section 20. Waiver void.

(a) Except as provided for in subsection (c) of this Section, any agreement entered into by a consumer for the purchase or lease of a used motor vehicle that waives, limits, or disclaims the rights set forth in this Act shall be void as contrary to public policy. Further, if a dealer fails to give the written warranty required by this Act, the dealer nevertheless shall be deemed to have given the warranty as a matter of law.

(b) Nothing in this Act shall in any way limit the rights or remedies that are otherwise available to a consumer under any other law.

(c) Notwithstanding subsection (a) of this Section, this Act shall not apply (i) to a used motor vehicle sold for, or in the case of a lease where the value of the used motor vehicle as agreed to by the consumer and the dealer is, less than $1,500, (ii) to a used motor vehicles with over 100,000 miles at the time of sale or lease if the mileage is indicated in writing at the time of sale or lease, or (iii) to a used motor vehicle that the consumer purchases "as is", provided that the consumer is informed of his or her rights under this Act and waives those rights in writing. Further, this Act shall not apply to the sale or lease of antique motor vehicles as defined in Section 1-102.1 of the Illinois Vehicle Code.

Section 25. Time of delivery; location of warranty; notice. The written warranty provided for in Section 10 and the written notice provided for in Section 15 shall be delivered to the consumer at or before the time the consumer signs the sales or lease contract for the used motor vehicle. The warranty and notice may be set forth on one sheet or on separate sheets. The warranty and notice may be separate from, attached to, or a part of the sales or lease contract. If the warranty and notice are part of the sales or lease contract, they shall be separated from the other contract provisions and each headed by a conspicuous title.

Section 30. Arbitration and enforcement.

(a) If a dealer has established or participates in an informal dispute settlement procedure that complies in all respects with the provisions of Title 16, Code of Federal Regulation, Part 713, the provisions of this Act concerning refunds or replacement shall not apply to any consumer who has not first resorted to that procedure. Dealers utilizing informal dispute settlement procedures pursuant to this Section shall insure that arbitrators participating in the informal dispute settlement procedures are familiar with the provisions of this Act and shall provide to arbitrators and consumers who seek arbitration a copy of the provisions of this Act together with the following notice in conspicuous 10-point bold face type:

"USED CAR LEMON LAW BILL OF RIGHTS

1. If you purchase a used car for more than $1,500 or lease a used car where you and the dealer have agreed that the car's value is more than $1,500 from anyone selling or leasing 3 or more used cars a year, you must be given a written warranty.

2. If your used car has less than 36,001 miles, a warranty must be provided for at least 90 days or 4,000 miles, whichever comes first.

3. If your used car has more than 36,000 miles but less than 80,000 miles, a warranty must be provided for at least 60 days or 3,000 miles, whichever comes first.

4. If your used car has 80,000 miles or more but no more than 100,000 miles, a warranty must be provided for at least 30 days or 1,000 miles, whichever comes first.

5. Cars with over 100,000 miles are not covered.

6. If your engine, transmission, drive axle, brakes, radiator, steering, alternator, generator, starter, or ignition system (excluding the battery) are defective, the dealer or his or her agent must repair or, if he or she so chooses, reimburse you for the reasonable cost of repair.

7. If the same problem cannot be repaired after 3 or more attempts, you are entitled to return the car and to receive a refund of your purchase price or of all payments made under your lease contract, including sales tax and fees, minus a reasonable allowance for any damage not attributable to normal usage or wear, and, in the case of a lease contract, a cancellation of all further payments you are otherwise required to make under the lease contract.

8. If your car is out of service to repair a problem for a total of 15 days or more during the warranty period you are entitled to return the car and receive a refund of your purchase price or of all payments made under your lease contract, including sales tax and fees, minus a reasonable allowance for any damage not attributable to normal usage or wear, and, in the case of a lease contract, a cancellation of all further payments you are otherwise required to make under the lease contract.

9. A dealer may put into the written warranty certain provisions that will prohibit your recovery under certain conditions; however, the dealer may not cause you to waive any rights under the Used Vehicle Buyer Protection Act.

10. A dealer may refuse to refund your purchase price, or the payments made under your lease contract, if the problem does not substantially impair the value of your car or if the problem is caused by abuse, neglect, or unreasonable modification.

11. If a dealer has established an arbitration procedure, the dealer may refuse to refund your purchase price until you first resort to the procedure. If the dealer does not have an arbitration procedure, you may resort to any remedy provided by law and may be entitled to your attorney's fees if you prevail.

12. As an alternative to the arbitration procedure made available through the dealer, you may instead choose to submit your claim to an independent arbitrator, approved by the Attorney General. You may have to pay a fee for such an arbitration. Contact the Attorney General's office to find out how to arrange for independent arbitration.

13. If any dealer refuses to honor your rights or you are not satisfied by the informal dispute settlement procedure, complain to the Illinois Attorney General."

(b) A dealer shall have up to 30 days from the date of notice by the consumer that the arbitrator's decision has been accepted to comply with the terms of the decision. Provided, however, that nothing contained in this Section shall impose any liability on a dealer where a delay beyond the 30-day period is attributable to a consumer who has requested a particular replacement vehicle or otherwise made compliance impossible within the period.

(c) Upon the payment of a prescribed filing fee, a consumer shall have the option of submitting any dispute arising under this Act to an alternate arbitration mechanism established pursuant to the rules promulgated by the Attorney General. Upon application of the consumer and payment of the filing fee, the dealer shall submit to the alternate arbitration.

The alternate arbitration shall be conducted by a professional arbitrator or arbitration firm appointed by and under rules promulgated by the Attorney General. The rules for appointment shall ensure the personal objectivity of its arbitrators and the right of each party to present its case, to be in attendance during any presentation made by the other party, and to rebut or refute the presentation. In all other respects, the alternate arbitration shall be governed by the Uniform Arbitration Act.

(d) The notice required by subsection (a) of this Section, entitled "Used Car Lemon Law Bill of Rights", shall be provided to arbitrators and consumers who seek arbitration under this Section.

(e) A dealer shall have 30 days from the date of mailing of a copy of the arbitrator's decision to the dealer to comply with the terms of the decision. Failure to comply within the 30-day period shall entitle the consumer to recover, in addition to any other recovery to which he or she may be entitled, a civil penalty of $25 for each business day beyond 30 days up to $500; provided that nothing in this Section shall impose any liability on a dealer where a delay beyond the 30-day period is attributable to a consumer who has requested a particular replacement vehicle or otherwise made compliance impossible within the period.

(f) The Secretary of State or any person designated by him or her may deny the application of any person for licensing under Section 5-102 of the Illinois Vehicle Code or suspend, revoke, or refuse to renew the license of a used vehicle dealer under that Section, if the Secretary of State or his or her designee determines that the applicant or licensee or any officer, director, stockholder, or partner, or any other person directly or indirectly interested in the business has deliberately failed to pay an arbitration award, which has not been stayed or appealed, rendered in an arbitration proceeding pursuant to this Section for 60 days after the date of mailing of a copy of the award to the licensee.

(g) In no event shall a consumer who has resorted to an informal dispute settlement procedure be precluded from seeking the rights or remedies available by law.

Section 35. Notice of consumer rights. At the time of purchase or lease of a used motor vehicle from a dealer in this State, the dealer shall provide to the consumer a notice, printed in not less than 8-point bold face type, entitled "Used Car Lemon Law Bill of Rights". The text of the notice shall be identical with the notice required by subsection (a) of Section 30 of this Act.

Section 40. Attorney's fees. In an action brought to enforce the provisions of this Act, the court may award reasonable attorney's fees to a prevailing plaintiff or to a consumer who prevails in any judicial action or proceeding arising out of an arbitration proceeding. In the event a prevailing plaintiff is required to retain the services of an attorney to enforce collection of an award granted pursuant to this Act, the court may assess against the dealer reasonable attorney's fees for services rendered to enforce collection of the award.

Section 45. Statute of limitations. Any action brought pursuant to this Act shall be commenced within 4 years of the date of original delivery of the used motor vehicle to the consumer.