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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

  

                         Laws of Minnesota 1990 

                        CHAPTER 408-H.F.No. 2321 
           An act relating to consumer protection; requiring an 
          itemized statement for certain automobile purchase 
          price refunds; amending Minnesota Statutes 1988, 
          sections 325F.662, subdivision 8; and 325F.665, 
          subdivisions 3 and 6. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1988, section 325F.662, 
subdivision 8, is amended to read: 
    Subd. 8.  [REFUNDS.] (a) A refund, as provided under 
subdivision 2, must consist of the full purchase price of the 
used motor vehicle and all other charges, including but not 
limited to excise tax, registration tax, license fees, and 
reimbursement for towing expenses incurred by the consumer as a 
result of the vehicle being out of service for warranty repair, 
less a reasonable allowance for the consumer's use of the 
vehicle not exceeding ten cents per mile driven or ten percent 
of the purchase price, whichever is less.  Refunds must include 
the amount stated by the dealer as the trade-in value of any 
vehicle traded in and applied to the purchase price of the used 
motor vehicle.  Refunds must be made to the consumer and 
lienholder, if any, as their interests appear on the records of 
the registrar of motor vehicles. 
    (b) The amount of the excise tax to be paid by the dealer 
to the consumer under paragraph (a) is the tax paid by the 
consumer when the vehicle was purchased less an amount equal to 
the tax paid multiplied by a fraction, the denominator of which 
is the purchase price of the vehicle and the numerator of which 
is the allowance deducted from the refund for the consumer's use 
of the vehicle.  
    (c) A dealer must give the consumer an itemized statement 
listing each of the amounts refunded under this subdivision.  If 
the amount of excise tax refunded is not separately stated, or 
if the dealer does not apply for a refund of the tax within one 
year of the return of the motor vehicle, the department of 
public safety may refund the excise tax, as determined under 
paragraph (b), directly to the consumer and lienholder, if any, 
as their interests appear on the records of the registrar of 
motor vehicles. 
    Sec. 2.  Minnesota Statutes 1988, section 325F.665, 
subdivision 3, is amended to read: 
    Subd. 3.  [MANUFACTURER'S DUTY TO REFUND OR REPLACE.] (a) 
If the manufacturer, its agents, or its authorized dealers are 
unable to conform the new motor vehicle to any applicable 
express warranty by repairing or correcting any defect or 
condition which substantially impairs the use or market value of 
the motor vehicle to the consumer after a reasonable number of 
attempts, the manufacturer shall either replace the new motor 
vehicle with a comparable motor vehicle or accept return of the 
vehicle from the consumer and refund to the consumer the full 
purchase price, including the cost of any options or other 
modifications arranged, installed, or made by the manufacturer, 
its agent, or its authorized dealer within 30 days after the 
date of original delivery, and all other charges including, but 
not limited to, sales or excise tax, license fees and 
registration fees, reimbursement for towing and rental vehicle 
expenses incurred by the consumer as a result of the vehicle 
being out of service for warranty repair, less a reasonable 
allowance for the consumer's use of the vehicle not exceeding 
ten cents per mile driven or ten percent of the purchase price, 
whichever is less.  If the manufacturer offers a replacement 
vehicle under this section, the consumer has the option of 
rejecting the replacement vehicle and requiring the manufacturer 
to provide a refund.  Refunds must be made to the consumer, and 
lienholder, if any, as their interests appear on the records of 
the registrar of motor vehicles.  Refunds shall include the 
amount stated by the dealer as the trade-in value of a 
consumer's used motor vehicle, plus any additional amount paid 
by the consumer for the new motor vehicle.  A manufacturer must 
give to the consumer an itemized statement listing each of the 
amounts refunded under this section.  If the amount of sales or 
excise tax refunded is not separately stated, or if the 
manufacturer does not apply for a refund of the tax within one 
year of the return of the motor vehicle, the department of 
public safety may refund the tax, as determined under paragraph 
(h), directly to the consumer and lienholder, if any, as their 
interests appear on the records of the registrar of motor 
vehicles.  A reasonable allowance for use is that amount 
directly attributable to use by the consumer and any previous 
consumer during any period in which the use and market value of 
the motor vehicle are not substantially impaired.  It is an 
affirmative defense to any claim under this section (1) that an 
alleged nonconformity does not substantially impair the use or 
market value, or (2) that a nonconformity is the result of 
abuse, neglect, or unauthorized modifications or alterations of 
a motor vehicle by anyone other than the manufacturer, its agent 
or its authorized dealer.  
    (b) It is presumed that a reasonable number of attempts 
have been undertaken to conform a new motor vehicle to the 
applicable express warranties, if (1) the same nonconformity has 
been subject to repair four or more times by the manufacturer, 
its agents, or its authorized dealers within the applicable 
express warranty term or during the period of two years 
following the date of original delivery of the new motor vehicle 
to a consumer, whichever is the earlier date, but the 
nonconformity continues to exist, or (2) the vehicle is out of 
service by reason of repair for a cumulative total of 30 or more 
business days during the term or during the period, whichever is 
the earlier date.  
    (c) If the nonconformity results in a complete failure of 
the braking or steering system of the new motor vehicle and is 
likely to cause death or serious bodily injury if the vehicle is 
driven, it is presumed that a reasonable number of attempts have 
been undertaken to conform the vehicle to the applicable express 
warranties if the nonconformity has been subject to repair at 
least once by the manufacturer, its agents, or its authorized 
dealers within the applicable express warranty term or during 
the period of two years following the date of original delivery 
of the new motor vehicle to a consumer, whichever is the earlier 
date, and the nonconformity continues to exist.  
     (d) The term of an applicable express warranty, the 
two-year period and the 30-day period shall be extended by any 
period of time during which repair services are not available to 
the consumer because of a war, invasion, strike, or fire, flood, 
or other natural disaster.  
     (e) The presumption contained in paragraph (b) applies 
against a manufacturer only if the manufacturer, its agent, or 
its authorized dealer has received prior written notification 
from or on behalf of the consumer at least once and an 
opportunity to cure the defect alleged.  If the notification is 
received by the manufacturer's agent or authorized dealer, the 
agent or dealer must forward it to the manufacturer by certified 
mail, return receipt requested.  
     (f) The expiration of the time periods set forth in 
paragraph (b) does not bar a consumer from receiving a refund or 
replacement vehicle under paragraph (a) if the reasonable number 
of attempts to correct the nonconformity causing the substantial 
impairment occur within three years following the date of 
original delivery of the new motor vehicle to a consumer, 
provided the consumer first reported the nonconformity to the 
manufacturer, its agent, or its authorized dealer during the 
term of the applicable express warranty.  
     (g) At the time of purchase or lease, the manufacturer must 
provide directly to the consumer a written statement on a 
separate piece of paper, in 10-point all capital type, in 
substantially the following form:  "IMPORTANT:  IF THIS VEHICLE 
IS DEFECTIVE, YOU MAY BE ENTITLED UNDER THE STATE'S LEMON LAW TO 
REPLACEMENT OF IT OR A REFUND OF ITS PURCHASE PRICE OR YOUR 
LEASE PAYMENTS.  HOWEVER, TO BE ENTITLED TO REFUND OR 
REPLACEMENT, YOU MUST FIRST NOTIFY THE MANUFACTURER, ITS AGENT, 
OR ITS AUTHORIZED DEALER OF THE PROBLEM IN WRITING AND GIVE THEM 
AN OPPORTUNITY TO REPAIR THE VEHICLE.  YOU ALSO HAVE A RIGHT TO 
SUBMIT YOUR CASE TO THE CONSUMER ARBITRATION PROGRAM WHICH THE 
MANUFACTURER MUST OFFER IN MINNESOTA."  
    (h) The amount of the sales or excise tax to be paid by the 
manufacturer to the consumer under paragraph (a) shall be the 
tax paid by the consumer when the vehicle was purchased less an 
amount equal to the tax paid multiplied by a fraction, the 
denominator of which is the purchase price of the vehicle and 
the numerator of which is the allowance deducted from the refund 
for the consumer's use of the vehicle.  
    Sec. 3.  Minnesota Statutes 1988, section 325F.665, 
subdivision 6, is amended to read: 
    Subd. 6.  [ALTERNATIVE DISPUTE SETTLEMENT MECHANISM.] (a) 
Any manufacturer doing business in this state, entering into 
franchise agreements for the sale of its motor vehicles in this 
state, or offering express warranties on its motor vehicles sold 
or distributed for sale in this state shall operate, or 
participate in, an informal dispute settlement mechanism located 
in the state of Minnesota which complies with the provisions of 
the Code of Federal Regulations, title 16, part 703, and the 
requirements of this section.  The provisions of subdivision 3 
concerning refunds or replacement do not apply to a consumer who 
has not first used this mechanism before commencing a civil 
action, unless the manufacturer allows a consumer to commence an 
action without first using this mechanism.  
     (b) An informal dispute settlement mechanism provided for 
by this section shall, at the time a request for arbitration is 
made, provides to the consumer and to each person who will 
arbitrate the consumer's dispute, information about this section 
as approved and directed by the attorney general, in 
consultation with interested parties.  The informal dispute 
settlement mechanism shall permit the parties to present or 
submit any arguments based on this section and shall not 
prohibit or discourage the consideration of any such arguments.  
In developing and approving information about this section as 
provided herein, the attorney general is not subject to the 
rulemaking provisions of chapter 14.  
    (c) If, in an informal dispute settlement mechanism, it is 
decided that a consumer is entitled to a replacement vehicle or 
refund under subdivision 3, then any refund or replacement 
offered by the manufacturer or selected by a consumer shall 
include and itemize all amounts authorized by subdivision 3.  If 
the amount of excise tax refunded is not separately stated, or 
if the manufacturer does not apply for a refund of the tax 
within one year of the return of the motor vehicle, the 
department of public safety may refund the excise tax, as 
determined under subdivision 3, paragraph (h), directly to the 
consumer and lienholder, if any, as their interests appear on 
the records of the registrar of motor vehicles. 
    (d) No documents shall be received by any informal dispute 
settlement mechanism unless those documents have been provided 
to each of the parties in the dispute at or prior to the 
mechanism's meeting, with an opportunity for the parties to 
comment on the documents either in writing or orally.  If a 
consumer is present during the informal dispute settlement 
mechanism's meeting, the consumer may request postponement of 
the mechanism's meeting to allow sufficient time to review any 
documents presented at the time of the meeting which had not 
been presented to the consumer prior to the meeting.  
    (e) The informal dispute settlement mechanism shall allow 
each party to appear and make an oral presentation in the state 
of Minnesota unless the consumer agrees to submit the dispute 
for decision on the basis of documents alone or by telephone, or 
unless the party fails to appear for an oral presentation after 
reasonable prior written notice.  If the consumer agrees to 
submit the dispute for decision on the basis of documents alone, 
then manufacturer or dealer representatives may not participate 
in the discussion or decision of the dispute.  
    (f) Consumers shall be given an adequate opportunity to 
contest a manufacturer's assertion that a nonconformity falls 
within intended specifications for the vehicle by having the 
basis of the manufacturer's claim appraised by a technical 
expert selected and paid for by the consumer prior to the 
informal dispute settlement hearing.  
     (g) Where there has been a recent attempt by the 
manufacturer to repair a consumer's vehicle, but no response has 
yet been received by the informal dispute mechanism from the 
consumer as to whether the repairs were successfully completed, 
the parties must be given the opportunity to present any 
additional information regarding the manufacturer's recent 
repair attempt before any final decision is rendered by the 
informal dispute settlement mechanism.  This provision shall not 
prejudice a consumer's rights under this section.  
     (h) If the manufacturer knows that a technical service 
bulletin directly applies to the specific mechanical problem 
being disputed by the consumer, then the manufacturer shall 
provide the technical service bulletin to the consumer at 
reasonable cost.  The mechanism shall review any such technical 
service bulletins submitted by either party.  
     (i) A consumer may be charged a fee to participate in an 
informal dispute settlement mechanism required by this section, 
but the fee may not exceed the conciliation court filing fee in 
the county where the arbitration is conducted.  
     (j) Any party to the dispute has the right to be 
represented by an attorney in an informal dispute settlement 
mechanism.  
     (k) The informal dispute settlement mechanism has all the 
evidence-gathering powers granted an arbitrator under section 
572.14.  
     (l) A decision issued in an informal dispute settlement 
mechanism required by this section may be in writing and signed. 
    Presented to the governor April 3, 1990 
    Signed by the governor April 6, 1990, 11:03 a.m.