Dividends: Lemon Aid

The horror stories are legion. A spiffy new car has to be brought back to the repair shop time after time to have the same problem fixed. In the past, consumers stuck with such lemons could do little but wage an expensive legal fight with the manufacturer. In Connecticut, however, all that will change on Oct. 1, when the state's new "lemon law" takes effect.

The statute, the first of its kind in the U.S., defines a lemon as any new car that, during the first year of ownership or within the warranty period, whichever ends first, has been sent to the shop at least four times to have the same malfunction repaired or has been put out of service for 30 days. The new law is expected to encourage out-of-court settlements or, failing that, to make it easier to get favorable rulings against defective products by shifting to the automaker the burden of proving that it was not at fault. Manufacturers can avoid liability only by proving that the defect is not substantial, or that the problem came from owner negligence or from modifications the buyer made on the auto.

The Connecticut law is a marked contrast to May's congressional veto of a Federal Trade Commission rule that would have required used car dealers to list known major defects on cars they sell. Says Ernest Abate, the speaker of the Connecticut house of representatives and a backer of the bill: "I wanted the legislature to be more protective of consumer interests at a time when the Federal Government was moving away from regulation."