Lemon laundering: consumer protection on resale of returned defective cars without disclosing prior mechanic problems

Presently, it is undeniable that a car is forsooth crucial for people’s living, especially for people who need promptness and convenience in transportation. Purchasing the car is counted as an investment because of its high price. Therefore, it is certain that a consumer will expect best qualities in performance and safety. However, as the car is composed of numerous engines and parts under complex manufacturing and assembling process by advanced technologies, the car is thus a goods which is likely to be defective, such defective car is often called as ‘Lemon car’, and the consumer may not be of knowledge thereof while concluding a sale contract or obtaining the car, but the defect will mostly appear after the use for a period of time.Nowadays, in Thailand, the rights of consumer with regard to the defective goods are protected under various statutes, for instance, the Civil and Commercial Code, the Consumer Protection Act, B.E. 2522 (1979), the Consumer Case Procedure Act, B.E. 2551 (2008) and the Product Liability Act, B.E. 2551 (2008). One of the significant protections enshrined is that the consumer has a right to rescind a sale contract if the seller fail to have the defective car repaired and return the defective car to the seller; or instead of rescission, the consumer may demand the court for a replacement, the court is empowered to exercise a discretion to order the authorized dealer who is the seller and/or the manufacturer to replace a new car without any defect to the consumer. The defect which lead to rescission of sale contract or replacement for new car is mostly persistent problems or severe problems that are harmful to safety of a driver or impair efficiency and performance of its car, and cannot be completely repaired at several attempts. Once the defective car is returned, the manufacturer and authorized dealer have to bear all expense arising out of reparation thereof. Reselling such car will be difficult as it becomes a used car with a defect history. Nonetheless, as a serious defect is hidden inside such car, and an exterior part of a car is in a good condition with a low mileage, which is different from an ordinary used car, it leads to a gap manipulated by the manufacturer and authorized dealer to resell such retuned defective car to a subsequent consumer by concealing a defect history. The aforesaid conduct is called as ‘Lemon Laundering’ in the United State. In the worst case, the manufacturer and authorized dealer may resell the returned defective car without repairing the defects. This may be harmful to the safety of the driver, passengers and other road users.Thus, it is foremost to study and analyze relevant Thai laws, such as the Civil and Commercial Code, the Consumer Protection Act, B.E. 2522 (1979), the Consumer Case Procedure Act, B.E. 2551 (2008), the Product Liability Act, B.E. 2551 (2008), the Motor Vehicle Act, B.E. 2522 (1979), and the Penal Code, whether there are proper and adequate legal measures to protect the Thai consumer in case that the manufacture and/or authorized dealer resell the returned defective car by concealing background of defective issues or not. Moreover, foreign laws concerning consumer protection in such event should be studied and analyzed for adopting and prescribing proper and effective legal measures in consumer protection in Thailand.