12 Ways to Recover Even When Lemon Used Cars Are Sold “As Is”

This article expands upon, updates, and revises a December 17, 2018 version.

That a lemon used car is sold “as is” should not discourage consumers or their attorneys from seeking relief for vehicle defects or dealer misrepresentations. In almost every case, the consumer has a viable claim despite the “as is” sale. This article sets out a dozen ways for consumers to recover even when they are sold a lemon used car “as is.” 

The first four ways provide strong consumer remedies even if the “as is” disclaimer is effective. The remaining eight ways set out when the “as is” language is not effective to limit the dealer’s or manufacturer’s warranty obligations, thus allowing damage recoveries under the Uniform Commercial Code and the federal Magnuson-Moss Warranty Act. See NCLC’s Consumer Warranty Law § 2.3.1, Chapter 10.  Only the Magnuson-Moss claim provides for attorney fees. See NCLC’s Consumer Warranty Law § 2.7.8.

The article then lists shortcut methods to uncover other hidden vehicle defects—they often exist and can increase the size and the chances of a consumer’s recovery.  The article also provides tips concerning used car litigation.

1. Odometer Misrepresentations Can Lead to a Minimum of $10,000 Statutory Damages

A surprising number of vehicles have “spun” odometers and inaccurate disclosures of the odometer reading on the vehicle’s title or other paperwork. A claim under the federal statute regulating odometer tampering and disclosures is not based on a warranty and is actionable even when a used car is sold “as is.”  Any such waiver of the consumer’s rights under the federal statute is ineffective. See NCLC’s Automobile Fraud § 5.9. 

Anyone violating the federal odometer statute with an intent to defraud is liable for attorney fees plus the greater of $10,000 or treble actual damages. The consumer may even be able to recover $10,000 statutory damage awards against each of multiple defendants or for each of multiple counts. See NCLC’s Automobile Fraud § 6.9.2.

There is no cap on class action recoveries—each class member can recover the greater of $10,000 or treble actual damages. See NCLC’s Automobile Fraud § 6.9.6.  For more on federal odometer statute claims, see NCLC’s Automobile Fraud Chapter 5 and Chapter 6.

2. UDAP Recoveries Available Despite the “As Is” Disclaimer

Every state has a “UDAP” statute providing a private right of action to remedy deceptive and in most states unfair or unconscionable practices. Statutes typically provide for the consumer’s attorney fees and some combination of actual, minimum, multiple, and punitive damages. See NCLC’s Unfair and Deceptive Acts and Practices Appendix A. 

Such statutes will apply to almost any form of dealer misconduct in the sale of a used vehicle, including undisclosed vehicle defects. See NCLC’s Automobile Fraud § 9.4.8. The UDAP claim is not based upon breach of the vehicle’s warranty or breach of a contract, but rather on the dealer’s deceptive or unfair practices. An “as is” disclaimer does not prevent a UDAP claim based upon the dealer’s oral representations, failure to disclose, or unfair conduct. See NCLC’s Automobile Fraud § 9.4.3.  See also NCLC’s Unfair and Deceptive Acts and Practices § 4.2.20.4.

3. Fraud Claims for Punitive Damages Unaffected by “As Is” Disclaimer

In most jurisdictions, a fraud claim can recover punitive damages and may be a good choice where the dealer’s conduct is intentional and egregious. A fraud claim is based on a tort and not breach of warranty or contract, so that the “as is” disclaimer does not prevent a fraud recovery. See NCLC’s Automobile Fraud § 8.4.2.  A fraud claim will not provide for attorney fees, but those fees can be recovered where state UDAP, the federal odometer statute, or Magnuson-Moss Act claims are added to the consumer’s case.  For more on fraud claims and punitive damages, see NCLC’s Automobile Fraud Chapter 8. 

4. Revoking an “As Is” Sale

Even when an “as is” disclaimer is effective, some courts allow the consumer to revoke acceptance of a used car if the defect is serious enough—the dealer has not delivered the vehicle that was ordered.  Revocation of acceptance cancels the sale, and the consumer recovers all payments and trade-ins while returning the vehicle. Revocation despite the “as is” disclaimer may be easier where the used car is relatively new and the original manufacturer’s warranty is still in effect. See NCLC’s Consumer Warranty Law § 5.14.

5. Seven Jurisdictions Prohibit “As Is” Used Car Sales

The District of Columbia, Kansas, Maryland, Massachusetts, Mississippi, Washington, and West Virginia prohibit “as is” sales in consumer transactions, so the “as is” disclaimer in a used car sale is ineffective.  In some of these jurisdictions, very low value other used vehicles are excluded from this protection. See NCLC’s Consumer Warranty Law § 15.5.7.

6. Twenty-Six States Restrict but Do Not Eliminate “As Is” Sales of Used Cars

Beyond those seven states that broadly prohibit “as is” sales, twenty-six other states have some form of legislation protecting purchasers of used vehicles despite a dealer’s attempt to disclaim all liability.  A state-by-state summary of these restrictions is found at NCLC’s Consumer Warranty Law § 15.5.7.

Hawaii, Massachusetts, Minnesota, New Jersey, New York, Rhode Island, and the Virgin Islands have used car lemon laws that provide minimum warranties protecting used car buyers despite an “as is” disclaimer.  Arizona, Connecticut, Maine, and New Mexico create statutory warranties or require the implied warranty of merchantability to be in effect for at least the first few weeks after the sale. 

Pennsylvania provides that there is an implied representation that any vehicle sold in the state is roadworthy and, effective August 19, 2024, adds other protections. Illinois and Nevada have restrictions on disclaimers. Virginia requires special language in any disclaimer regarding a used vehicle sold for consumer use. Wisconsin requires specific negotiation in motor vehicle sales to disclaim implied warranties. 

Most states also require used cars to pass an inspection, sometimes at the point of sale. New York’s law is particularly strong, creating non-waivable protections and allowing a private cause of action. Several states also have laws requiring disclosure of damage that used cars have suffered before sale. 

7. “As Is” Disclaimers Are Not Effective If Not Properly Disclosed

Subject to state law limitations set out in #5 and #6 above, the Uniform Commercial Code permits disclaimer of a vehicle’s implied warranties if the dealer uses the correct language, such as “as is” or “with all faults.”  But U.C.C. § 2-316(2) requires the disclaimer to be in writing and conspicuous. A disclaimer is not conspicuous if it only contrasts slightly and is not set off from the neighboring text. If the print is too small or too light to be read, the disclaimer is inconspicuous. See generally NCLC’s Consumer Warranty Law § 5.8.

The disclaimer must be given prior to consummation of the sale. If made later, it has not been made conspicuously and is not part of the basis of the bargain. Any disclaimer found in documents given to the consumer after the sale has been made is not effective. See NCLC’s Consumer Warranty Law § 5.7. 

To be binding, the “as is” disclaimer must be agreed upon by the parties. A sticker on the car saying “as is” is not part of the sales contract and should not be binding. See NCLC’s Consumer Warranty Law § 5.10. Some courts require that the disclaimer be negotiated or specifically brought to the consumer’s attention. Even then, it may not be enough if the dealer orally misrepresents the nature of the disclaimer. Where a transaction is conducted in another language, an English-only disclaimer may be ineffective. See NCLC’s Consumer Warranty Law § 5.9.

8. “As Is” Disclaimer Does Not Apply to the Warranty of Good Title

A used car sold “as is” still comes with a warranty that the title conveyed is good, that its transfer is rightful, and that the car will be delivered free from any lien or encumbrance of which the buyer at the time of contracting has no knowledge.  See U.C.C. § 2-312(1); NCLC’s Consumer Warranty Law § 4.5.  This warranty of good title can be modified only by specific language related to the title or by circumstances which give the buyer reason to know of the title defect. See U.C.C. § 2-312 comment 4. 

9. A Manufacturer Warranty May Still Apply Despite Dealer’s “As Is” Disclaimer

Whatever the nature of a dealer’s own warranty on a used vehicle, the vehicle may still be subject to the manufacturer’s original written warranty. A manufacturer’s written warranty rarely limits itself to the first purchaser, so a subsequent purchaser is protected by the unexpired portion of the manufacturer’s warranty.

Certain manufacturer warranties have an extended life beyond the typical three or four years. California requires manufacturers to offer a 10-year/150,000-mile battery warranty for cars classified as partial zero emission control and some manufacturers may be offering extended warranties on electric vehicle batteries in other states, anticipating similar federal requirements in coming years.  A federal clean air act requires catalytic converters, the electronic emissions control unit and the onboard emissions diagnostic device to be warranted for the first 8 years or 80,000 miles. 

Used vehicles are frequently sold today through a manufacturer’s certified pre-owned vehicle program that provides another written warranty. Breach of any manufacturer written warranty leads to remedies against the manufacturer under the federal Magnuson-Moss Warranty Act, including actual damages and attorney fees, even when the dealer sells the vehicle to the consumer “as is.” 

Moreover, when the manufacturer offers a written warranty, the federal Magnuson-Moss Warranty Act prevents the manufacturer from disclaiming implied warranties (although the manufacturer can limit the implied warranty’s duration to that of the written warranty if it explicitly does so). See NCLC’s Consumer Warranty Law § 2.3.2. Thus, a consumer buying an “as is” vehicle may still have a claim against the manufacturer for breach of both its written warranty and the implied warranty of merchantability.

Certain states’ new car lemon laws may also apply to subsequent purchasers of low mileage used cars or to those purchasing demonstrators or similar used cars that have never been titled in a buyer’s name. If applicable, the lemon law will provide the consumer with a replace or refund remedy, and often attorney fees in addition. See NCLC’s Consumer Warranty Law § 14.2.3.3.

10. Used Car Dealers’ Express Warranties Cannot Be Disclaimed

A dealer’s “as is” disclaimer applies only to disclaim implied warranties and can never limit the dealer’s express warranties.  Used car dealers cannot help but make express warranties whether they know it or not. Descriptions on the purchase order, installment sales agreement, or other sales documents are almost always express warranties, such as the vehicle’s make, model, year, and mileage, or any other notation such as “undamaged condition” or “replaced a/c.” Even advertising can create an express warranty. 

The absence of a salvage brand on the vehicle’s title is a representation about the vehicle that it has never been declared salvage or that the appropriate steps were taken to remove the salvage brand. Oral statements can also create express warranties, such as “is a good runner” or “reliable and in good, safe, roadworthy condition” or “mechanically A-1” or “never been wrecked” or “only one previous owner and no major repairs.” See NCLC’s Consumer Warranty Law § 5.2.

11. Sale of Service Contract May Prevent “As Is” Sale

The federal Magnuson-Moss Warranty Act prohibits implied warranty disclaimers if the dealer “enters into” a service contract with the consumer within ninety days of the car’s sale. Service contracts are an important profit source in the sale of used cars and often accompany the vehicle sale. Even if the dealer “enters into” a service contract that is limited in scope, the “as is” disclaimer is ineffective.  

Less clear, though, is when a dealer “enters into” a service contract. When the dealer sells its own service contract, it has clearly “entered into” the service contract, even if the dealer hires a third party to administer the contract, if the dealer is financially responsible for the contract. NCLC’s Consumer Warranty Law § 2.3.2.5.1. 

When a dealer offers another entity’s service contract, the dealer has “entered into” such a contract if the dealer is obligated to perform under the contract, such as when the contract provides that all service will be at that dealer. If the dealer merely sells another party’s contract without more, the dealer may not have “entered into” the contract. Individual circumstances will determine the result.  See NCLC’s Consumer Warranty Law § 2.3.2.5.  

12. “As Is” Disclaimer Ineffective If Unconscionable, in Bad Faith, or Circumstances Indicate Otherwise

U.C.C. § 2-316(3)(a) provides that an “as is” disclaimer is effective “unless the circumstances indicate otherwise,” such as where the buyer does not understand English or does not understand the significance of the disclaimer—e.g., believing “as is” means “as equipped.” The dealer’s conduct can also create circumstances that “indicate otherwise,” such as where the dealer takes steps to divert the consumer’s attention from the disclaimer, discourages the consumer from reading the disclaimer, or puts a hand over the disclaimer. See NCLC’s Consumer Warranty Law § 5.11. 

The UCC’s unconscionability standards also apply to warranty disclaimers, such as where the dealer knew of major defects, the consumer did not understand English, or the dealer contradicted the disclaimer with oral assurances. If unconscionable, the “as is” disclaimer will not be enforced. See NCLC’s Consumer Warranty Law § 5.12. 

The UCC also provides that every contract imposes an obligation of good faith. This defense to an “as is” sale should be effective where the dealer has failed to disclose material vehicle defects. See U.C.C. § 2-314, comment 3; NCLC’s Consumer Warranty Law § 5.13.

Shortcut Ways to Uncover Hidden Vehicle Defects

Too often a used car’s noticeable defects may be only the tip of the iceberg.  Here are four ways to quickly and inexpensively uncover other serious undisclosed defects that may increase a consumer’s damages claim and even increase the chances of a successful outcome:

• Enter the vehicle’s VIN at https://www.nhtsa.gov/recalls to perform a free and instant check for unrepaired safety recalls.
• Do a Google search of the VIN—what shows up may be surprising.
• Enter the VIN at vehiclehistory.gov to check if the car has been identified as a total loss, salvage, or junk. Access to this federal government database is via private vendors that charge as little as $3.50. This is the only database to which insurance companies are required by law to report wrecked cars.
• Commercial databases such as www.carfax.com or www.autocheck.com buy data about damage and other problems in a vehicle’s past, but are more expensive for an individual search, although they sometimes offer an unlimited number of searches for a limited time, such as one month.
• Prior to hiring an expert to perform a more thorough examination, one can obtain an independent inspection of the car from a mechanic familiar with both body and mechanical issues, usually for between $50 and $150.

For more on vehicle investigatory techniques, see NCLC’s Automobile Fraud Chapter 2. 

Litigation Tips for Used Car Defect Cases

While arbitration provisions are pervasive in used car sales, those drafted by smaller used car dealers may not pass current standards of enforceability.  For a detailed analysis about ways to challenge an arbitration agreement, see NCLC’s just-released treatise, Consumer and Worker Arbitration Provisions.

Nevertheless, litigation over the enforceability of an arbitration provision may be time-consuming.  Moreover, in many states the defendant has a right to an immediate appeal if the arbitration provision is found unenforceable, and this may even stay the litigation until the matter is resolved. See NCLC’s Consumer and Worker Arbitration Provisions § 2.7.5.

Another option is to take the dispute to arbitration. If the arbitration is before the AAA or JAMS, the total cost to the consumer will be around $200, but the car dealer will have to front thousands of dollars. Suddenly, arbitration will be less attractive to the dealer, and it may even refuse to participate.  Then the consumer has several options, including now litigating in court or forcing the dealer to arbitrate. This may also lead to a quick settlement.

Practitioners report some success in bringing claims before an arbitrator—particularly when dealer practices are egregious and the arbitrator is truly neutral. For tips on conducting an individual arbitration, see NCLC’s Consumer and Worker Arbitration Agreements Chapter 9. 

One should also seek punitive damages in arbitration when the dealer’s conduct is outrageous. Unlike a jury award of punitive damages, there will be little or no court review as to the size of an arbitrator’s award of punitive damages, and even Supreme Court due process limits on the size of punitive damages will not apply. See NCLC’s Consumer and Worker Arbitration Agreements § 11.7.

If the used car case is instead tried in court, typically it will be in state court, which often has advantages over federal court, particularly when dealing with arbitration provisions. Even federal Magnuson-Moss Act claims require $50,000 in controversy for federal jurisdiction. See NCLC’s Consumer Warranty Law § 2.7.2.1. 

An important exception allowing federal jurisdiction are claims under the federal odometer statute, but these can typically remain in state court if brought instead under a state odometer statute.  See NCLC’s Automobile Fraud § 6.6.  

Even class actions may remain in state court, because federal court removal authority under the Class Action Fairness Act will not apply where a dealer is local, and the consumers are all residents of that state. See NCLC’s Consumer Class Actions § 2.4.2.  See also id. at Appx. C for a state-by-state analysis of state court class action procedures.

Unlike much consumer litigation, standing issues should not arise in used car defect cases, because the consumer is seeking actual damages. Even the federal odometer statute’s $10,000 statutory damages do not raise standing issues because it can easily be shown that a mileage misrepresentation reduces the car’s value from what the consumer paid for the car.

More Free Resources from NCLC

Used car defects are just one issue facing many American families. NCLC's consumer guide Surviving Debt provides practical advice for navigating a debt burden, and includes an overview of consumer rights around vehicle repossessions, debt collection, credit reporting, student loans, mortgages, and more. Surviving Debt is available for free in digital format on the NCLC Digital Library, and for purchase in print from the NCLC Bookstore.