Malaysia is set to table a new consumer protection act, akin to the “Lemon Law” found in other countries, in the Dewan Rakyat in March. This move aims to enhance consumer rights, particularly for car buyers, by addressing issues related to defective vehicles.

According to NST, Domestic Trade and Cost of Living Minister Datuk Armizan Mohd Ali announced the initiative, revealing that legal experts have been appointed to conduct a legislative framework study starting this month. This study is expected to be completed by September.

Interim Consumer Protection Strategies

Before finalising the new legislative framework, the ministry will implement two interim consumer protection strategies:

1. Special Consultation Task Force: A task force focused on motor vehicle complaints will be established at the ministry level. This task force will facilitate tripartite negotiations between the ministry, car buyers, and dealers or manufacturers. “Through these negotiations, we aim to achieve fair and balanced solutions for all parties,” Armizan explained. The task force was empowered last Saturday.
2. Collaboration with Bank Negara Malaysia (BNM): The ministry is working to ensure alignment and standardisation of approval letters between banking institutions. This aims to help consumers make redemption claims in the Malaysian Consumer Claims Tribunal or courts. Currently, consumers face difficulties obtaining approval letters due to ownership issues under the Hire Purchase Act 1967, which defines the bank or financial institution as the vehicle owner until the consumer completes payment.

Statistics and Government Intervention

Since 2019, the tribunal has recorded 557 filings involving new cars, with 523 cases resolved. For used cars, 1,201 cases were filed, and 1,142 have been settled.

These interim strategies represent government intervention to assist consumers when their initial claims with industry players fail. “We hope automotive industry players will cooperate to protect consumer rights and foster a fair and transparent market,” Armizan added.

Background on “Lemon Law”

The “Lemon Law” in the United States allows car buyers to receive compensation for repeatedly defective products that fail to function as promised. Many other countries have similar laws to protect consumers.

In Malaysia, existing legal acts related to consumer compensation include the Consumer Protection Act 1999 (CPA), the Contract Act 1950, the Sale of Goods Act 1957, and the Hire Purchase Act 1967. These laws provide a framework for consumer rights against suppliers and manufacturers for non-compliant products.

The proposed new act or amendments will aim to strengthen these protections, ensuring Malaysian consumers have robust mechanisms to address issues with defective vehicles.