Vehicle recalls and class actions: what the importer must do and what you are entitled to

Service page: Class actions and consumer claims lawyer.

“Recall” is not a legal term in Hebrew. In Israeli law an express duty is set out in the car industry, and there the defect that requires a call for repair is called a “serial safety defect”. Another express duty exists for food: a food business that learned that food it produced, imported or sold is “harmful food” must take, as soon as possible, reasonable measures to prevent its use, including, as appropriate and in coordination with the director of the Food Service, removing it from the distribution channels (withdrawal) and giving notice to the public (recall) (section 164(b) of the Protection of Public Health (Food) Law, 5776-2015 (חוק הגנה על בריאות הציבור (מזון), התשע״ו-2015)). Beyond these industries there is no general consumer recall law, and the rights derive from consumer law, from sale law and from the manufacturer’s liability for bodily injury. This distinction decides both what you can demand and when grounds for a class action arise.

Car recalls: what the law requires

The Licensing of Services and Professions in the Vehicle Industry Law, 5776-2016 defines a “serial safety defect” as a serial defect in a vehicle related to its operation, which in the vehicle manufacturer’s opinion may create a safety risk for its users or for the public at large, and which the manufacturer therefore announced. Note the wording: it is the manufacturer’s announcement that triggers the mechanism. Section 50 sets out what the importer must do from then on:

Four separate duties, each with practical content: treatment without payment, written notice to the Director and the garages, a public notice, and personal written notice to every registered car owner to whom the defect relates. Sections 50(d) and 50(e) place parallel duties on an indirect importer and on a small importer, and section 50(c) regulates how the information also reaches someone who imported a car by personal import. For an Israeli manufacturer licensed to manufacture and market vehicles, the parallel duties are set out in section 23.

The practical meaning: a car included in a recall is repaired without payment and regardless of the purchase date or the end of the warranty period. Demanding payment for treating a serial safety defect is a breach of section 50(a), whose only exception is related costs under section 52 for a car brought in by personal import under section 33. A defect in a new car you bought that is not part of a recall is discussed in the article A defective new car and the “lemon law”: the buyer’s rights.

When it becomes a class action

The recall itself is not a cause of action; it is actually the performance of the duty. The cause of action arises from the gap between what the law requires and what was actually done. The recurring patterns: not sending the personal notice to registered car owners; charging a payment or “related costs” that are not allowed toward a private car owner; a long delay between when the importer learned of the defect and the publication; and a misleading presentation of the scope of the defect.

The procedural route is item 1 of the Second Schedule to the Class Actions Law, 5766-2006: a claim against a dealer (a business) in connection with a matter between it and a customer. The substantive cause of action usually relies on the Consumer Protection Law, 5741-1981: section 2(a) prohibits a dealer from doing anything that may mislead a consumer in a material matter, and lists expressly in paragraph (4) “the use that can be made of the asset or the service, the benefit that can be derived from them and the risks involved in them”, and in paragraph (17) the warranty terms. Section 31(a) provides that such a breach is a civil wrong under the Torts Ordinance [New Version].

And what about compensation without proof of damage? Section 31A allows exemplary damages of up to NIS 10,000, but only for a closed list of breaches (returning the consideration under section 4C, a charge that continued after cancellation of a transaction, failure to deliver to the agreed place, and others). Failure to perform recall duties is not on the list. So the monetary remedy in a recall case relies on the damage proved (the cost of a private repair, loss of value, expenses) and on section 20 of the Class Actions Law as to how it is awarded and distributed. And in any case, in a class action the court does not award exemplary damages, nor compensation without proof of damage, except in a claim under item 9 of the Second Schedule; compensation for non-monetary damage can be awarded (section 20(e) of the Class Actions Law).

When the defective product caused bodily injury

This is a completely separate route, and usually a stronger one. The Defective Products (Liability) Law, 5740-1980 provides in section 2(a) that a manufacturer must compensate anyone who suffered bodily injury as a result of a defect in a product it manufactured, whether or not the manufacturer was at fault. This is absolute liability, with no need to prove negligence.

Section 3 defines when a product is defective: because of a flaw in it, it may cause bodily injury, or when warnings or instructions for handling and use were required for safety reasons and they were not given or are not suited to the danger. Section 3(b) adds a presumption: the product was defective if the circumstances of the case fit this conclusion better than the opposite.

The defenses in section 4 are a closed list of four, and one of them relates directly to recalls: under section 4(a)(3), a defense is available to a manufacturer if the product left its control against its will and it took reasonable measures to prevent this and to warn the public concerned of the risk. In other words, a timely warning is part of the defense, and a failure to warn makes the exposure more costly.

The limitation period here is special and short: section 6 sets three years for a claim under the Law, and in any case no later than ten years from the end of the year in which the product left the manufacturer’s control. This is different from the general limitation period, and this mistake loses cases. So checking the grounds for a class action in a recall case starts with the timeline, and only then with the question of the defect.

A defective product that is not a car: what the warranty really says

This is where one of the most common mistakes comes in: “six months, and the burden is on the shop”. That is not Israeli law. The Consumer Protection Regulations (Warranty and After-Sale Service), 5766-2006 apply to new electrical, electronic and gas products whose price to the consumer is more than NIS 150, and define the “warranty period” as a period of one year from the day the goods were delivered to the consumer.

Within that year, regulation 2(a) requires the manufacturer to repair any fault that is discovered, itself or through someone acting on its behalf, without consideration, and if a replacement of an item or of parts is needed, the replacement is also made without consideration. Regulation 2(b) requires giving the consumer a written confirmation detailing the nature of the repair. And the important point is regulation 2(c): the manufacturer is exempt from its obligations only if it has proved that the fault was caused by deliberate damage by the consumer. In other words, the burden is on the manufacturer, throughout the whole year, and not for “six months”.

Regulation 3 adds a duty to supply spare parts until the end of the warranty period, and for a product whose price is more than NIS 300, until the end of one more year after it. For the products listed in the First Schedule to the Regulations, including a refrigerator, a washing machine, a dishwasher, a television set and a central air conditioner, the duty is for seven years, one of which overlaps the warranty period (regulation 3(c)).

Non-conformity under the Sale Law, and the trap in section 14

The Sale Law, 5728-1968 adds a contractual layer. Section 11 lists when the seller has not performed its obligations, including delivering an asset “that does not have the quality or the characteristics needed for its ordinary or commercial use or for a special purpose implied by the agreement” (paragraph (3)), and an asset that does not match the model or sample shown (paragraph (4)).

The trap is in sections 13 and 14: the buyer must examine the item sold immediately after receiving it, and notify the seller of the non-conformity immediately after the time of the examination or immediately after discovering it, whichever is earlier. A buyer who did not give notice is not entitled to rely on it. The exception in section 16: if the non-conformity resulted from facts that the seller knew or should have known when the contract was made and did not disclose, the buyer may rely on it anyway, provided they gave notice immediately after discovering it. This is exactly the situation of a concealed defect, and it is the bridge between a story of a defective product and a class action cause of action for misleading.

You received a recall notice: what to do

1. Keep the notice and the date you received it. The notice is the evidence that the importer knew, and when.
2. Book an appointment at the service garage and make sure in writing that the treatment is without payment. If payment is demanded, ask for the demand in writing.
3. Document the condition of the car or the product before the treatment, and keep the repair confirmation.
4. Check for related damage: was damage caused before the repair? Bodily injury is claimed on the route of the Defective Products (Liability) Law, whose limitation period is short.
5. Check whether you never received a notice even though the car is registered in your name. A failure to give the personal notice under section 50(b)(3) is exactly the kind of common question that justifies a class proceeding.

Frequently asked questions

Who must carry out a vehicle recall, and at whose expense?

Under section 50(a) of the Licensing of Services and Professions in the Vehicle Industry Law, 5776-2016, a direct importer must deal, in its service garages, with a serial safety defect in every vehicle of a make that it imports, and must not demand any payment from the vehicle owner for the treatment. Section 50(b) adds three duties: written notice to the Director and the service garages, publishing a notice to the public in the manner and at the time set by the Minister, and personal written notice to all the owners of vehicles registered in Israel to which the defect relates, including inviting them for treatment. Parallel duties apply to an indirect importer and to a small importer under sections 50(d) and 50(e), and to an Israeli manufacturer under section 23.

When can you file a class action because of a recall?

It is not the recall itself that creates a cause of action but the gap between the duty and what was done: not sending the personal notice to registered car owners, charging payment for the treatment contrary to section 50(a), a delay in publication, or a misleading presentation of the scope of the defect. The procedural route is item 1 of the Second Schedule to the Class Actions Law, 5766-2006: a claim against a dealer in connection with a matter between it and a customer. The substantive cause of action usually relies on section 2(a) of the Consumer Protection Law, 5741-1981, whose paragraph (4) expressly lists misleading about the risks involved in the asset, and section 31(a) provides that such a breach is a civil wrong under the Torts Ordinance.

How long is the warranty on an electrical product, and who has the burden of proof?

The Consumer Protection Regulations (Warranty and After-Sale Service), 5766-2006 apply to new electrical, electronic and gas products whose price to the consumer is more than NIS 150, and set a warranty period of one year from the day the goods were delivered. Within the period, regulation 2(a) requires the manufacturer to repair any fault without consideration, and if a replacement of an item or parts is needed, it too is without consideration. Regulation 2(c) provides that the manufacturer is exempt only if it proved that the fault was caused by deliberate damage by the consumer, which means the burden is on it throughout the whole year. Israeli law has no “six-month presumption”.

A defective product caused me bodily injury: what is the route?

The Defective Products (Liability) Law, 5740-1980 sets absolute liability in section 2(a): a manufacturer must compensate for bodily injury caused as a result of a defect in a product it manufactured, regardless of the question of fault. Section 3 also defines a defective product as a product for which warnings or safety instructions were required and were not given or are not suitable, and section 3(b) sets a presumption that the product was defective if the circumstances fit this conclusion better. The defenses in section 4 are a closed list, and one of them depends on the manufacturer having taken reasonable measures to warn the public. Note the special limitation period in section 6: three years, and no later than ten years from the end of the year in which the product left the manufacturer’s control.