Lemon law in Malaysia – no need to rush, enhance existing consumer protection laws instead: experts

Legal experts have said that existing laws are sufficient to protect consumers, therefore there is no need to rush the lemon law which is being considered for vehicles buyers, reported The Star.

Existing consumer protection laws, such as the Sale of Goods Act 1957, Consumer Protection Act 1999 (CPA), Contract Act 1950, Control of Supplies Act 1961, and Hire Purchase Act 1967 could be strengthened to enhance consumer protection, according to former president of the Malaysian Bar Salim Bashir who led the Bar Council from 2020 to 2021.

While these laws offer consumers recourse for defective goods, specific provisions required amendments for better protection, Salim said. “It is imperative to fine-tune existing laws by way of amendments without introducing a new lemon law in Parliament,” he said.

Earlier this month, the ministry of domestic trade and cost of living (KPDN) introduced two interim strategies aimed at protecting consumers regarding the right to claim compensation for defective or faulty products – particularly for motor vehicle purchases – before a new legal framework before the proposed lemon law is finalised, according to its minister Armizan Mohd Ali.

Several shortcomings were highlighted by Salim, namely the absence of a clear definition of merchantable quality as stated under Section 16 of the Sale of Goods Act. While the CPA offers supplementary consumer protection, the act also allows parties to override consumer rights through specific agreements which weaken its effectiveness in some cases, Salim added.

On this, Salim cited the case of Puncak Niaga Sdn Bhd v NZ Wheels Sdn Bhd in 2012, in which the court voided the contract over a defective car that failed to meet acceptable quality standards under Section 12 (2) of the Consumer Protection Act.

Section 51 of the CPA did not offer redress against manufacturers if defects arose from external factors after the product has left the factory, and the CPA also did not allow interest groups to file lawsuits on behalf of consumers, thus limiting collective action.

Meanwhile, Datuk Abdul Fareed Abdul Gafoor, who is also a former Bar Council president, voiced his support for a lemon law specifically for vehicles. While the CPA and Sale of Goods Act offer some consumer protection, they lack specifics in addressing recurring vehicle defects which leave consumers without clear remedies.

Abdul Fareed, who led the Malaysian Bar from 2019 to 2020, highlighted the absence of warranty standards and repair time limits, which often left consumers waiting for extended periods for repairs without a proper framework for claiming damages. “We need clearer warranty standards and reasonable repair time limits,” he said.

The power disparity between consumers and large automotive companies complicates efforts for a consumer to assert their rights under the CPA, where negotiating repairs of refunds could be difficult, leading to dissatisfaction and disputes.

A lemon law typically shifted the burden of proof to the manufacturer once a vehicle was deemed defective, forcing companies to act in good faith while providing stronger consumer protection without prolonged legal battles, Abdul Fareed said.

“Introducing a lemon law will offer clearer remedies and shift the burden of proof to manufacturers, giving consumers more protection,” Abdul Fareed said.

While there are definitely potential benefits of a lemon law, he warned of unintended consequences such as increased litigation and higher costs for both businesses and consumers. “Careful implementation with clear guidelines is essential to balance consumer rights with business interests and avoid a negative economic impact,” he added.

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