Dispute arises over “lemon law”

By Park Jin-hai

The Ministry of Land, Infrastructure and Transport (MOLIT) is pushing ahead with a Korean version of the “lemon law” where customers can exchange or get refunds for new cars they bought that have recurring defects.

Customers and consumer activists have hailed the legislative move, while carmakers are concerned that it might lead to increased social costs if suits and countersuits between customers and carmakers are filed.

MOLIT said it will revise the Automobile Management Act, emulating the U.S. lemon law, to protect customer rights.

It is currently reviewing a measure concerning “important” automobile parts that have needed repairs more than four times within the free warranty period, or “defects” occurring more than certain number of times within one month of purchase.

The important car parts include engines and power transmission devices, according to the ministry.

The move follows the actions of an angry Mercedes owner who damaged his own car with a golf club, after repeated engine failure following multiple repairs.

The ministry plans to come up with detailed guidelines for the revision in the first half of the year and submit the bill to the National Assembly for approval in latter half.

“In the U.S., it is a customer’s right. Although it is late, we should push ahead with the revision of the law to prevent consumer damage,” said Jung Sung-ho, a Minjoo Party of Korea lawmaker.

A Citizens’ Coalition for Economic Justice official said, “We welcome the government move. But it still lacks details including how to deal with the carmakers’ opposition.”

Under the current act, even it customers find critical defects such as engine failures during driving newly purchased cars, they can only claim for repairs and recalls.

The Fair Trade Commission has recommend that carmakers should exchange faulty cars for new ones or give a refund if they have safety-related critical failures more than four times or if they have parts that malfunction more than twice within one year of purchase. However, as this was a recommendation and not a binding law, it didn’t help customers much.

Out of 135 cases where customers asked for refunds or exchanges between January and June last year, only three requests were accepted, according to research by New Seoul University.

The carmakers worry that it might lead to increased costs.

“Clearly the Mercedes incident stoked the legislative move. I agree with the cause of better customer protection. Unlike the case with the FTC, however, when the exchange and refund are governed under the land ministry, we may see more court cases,” said an official of local carmaker. “It is very hard to reach an agreement on what defects require an exchange or refund.”

Another official in the imported car industry said she worries about black consumers who falsely claim defects, wanting to exchange their cars for new ones.