Cash-and-Keep Settlements in Connecticut Lemon Law Cases

“Cash-and-keep” is a Connecticut Lemon Law settlement structure where the consumer keeps the vehicle and receives a cash payment for diminished value. Not a statutory remedy under § 42-179(d), but a common settlement outcome.

How cash-and-keep works

• Consumer keeps the vehicle.
• Manufacturer pays cash representing the vehicle’s diminished value.
• Manufacturer may extend warranty to cover continued ownership.
• Release signed releasing further Lemon Law / CUTPA / Magnuson-Moss claims.

When cash-and-keep makes sense

• Defect resolved but consumer remains concerned about reliability.
• Vehicle still drivable with manageable issues.
• Consumer wants to avoid buying / leasing a replacement vehicle.
• Manufacturer wants to avoid the publicity of a buyback.
• CUTPA leverage — cash payment includes implied punitive component.

Typical cash-and-keep amounts

Varies by case strength:

• Weak case (1-2 attempts, no OOS): $1,500 - $5,000
• Moderate case (3 attempts, some OOS): $5,000 - $15,000
• Strong case (4+ attempts, 30+ OOS, written notice): $15,000 - $30,000+
• Strong CUTPA case: significantly higher with punitive component

Attorney fees in cash-and-keep

§ 42-180 fees (discretionary) still apply to prevailing consumers. Most cash-and-keep settlements include:

• Consumer’s cash payment.
• Separate attorney fees paid by manufacturer.
• No deduction of fees from consumer’s recovery.

Tax treatment

Cash-and-keep payments are generally treated as:

• Return of capital to the extent of vehicle’s diminished value (non-taxable).
• Punitive damages taxable as ordinary income.
• Attorney fees may be deductible.

Consult a tax advisor.

Release language

Cash-and-keep releases typically cover:

• Future Lemon Law claims for the same defect.
• CUTPA claims arising from the purchase.
• Magnuson-Moss claims related to the defect.

Watch for:

• Releases of future personal-injury claims.
• Non-disparagement clauses that bar consumer reviews.
• Confidentiality that bars complaints to DCP / BBB / regulators.

Bottom line

Cash-and-keep is a flexible settlement structure that works for consumers who want to keep their vehicle. The amount depends on case strength — strong cases with documented attempts + written notice + CUTPA exposure command higher payments. Review release language carefully with counsel.

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