I-Team Report: Cash for Clunkers

August 12, 2009 The summer's blockbuster new car program seemed simple enough. Trade in your old gas guzzler for an energy efficient model right off the assembly line, get a several thousand dollar credit on the bill that the government would then reimburse to the dealer. But this federal government project has left some losing out, even those who played by the book.

The federal cash for clunker rule book is almost two inches thick. When the regulations arrived from Washington at Metro Chicago car dealerships, there was a lot of reading required for an untested, quick-start program.

"The rules are extensive, the process for applying for the reimbursement is tech way way out of most of our capabilities," said Tony Blake, Shorewood Car Dealer.

At this southwest suburban dealership, an ad out front promises "new arrivals every day" to attract customers and their clunkers. Among them, Susan Kane of Crest Hill.

"I decided to go to the Tyson dealership in Shorewood to work out a deal," said Susan Kane, Clunker customer.

Kane and her husband had a 1987 Ford RV; a 2001 Nissan Xterra and a 2001 Cadillac, all of which she was told, qualified as clunkers under the federal gas mileage standards set by the government program.

Under the rules, the Kanes would received $4500 government credits for each of the two clunkers and just straight trade in value on the third. They were buying a pair of 2009 Jeep Patriots, put down a deposit and had the dealer's paperwork all set to go.

"We ran out of cars. We ran out of some models in 2 days," said Blake.

At one Chicago-area dealership late last month, and many others across the country, new car sales were at a record pace under the billion-dollar Cash for Clunkers program. The main lot there practically cleared out and a remote lot loaded with clunkers that customers had traded.

"We went from 3 ½ years of tough business to, the last 6 days of July we did a good month's business," said Blake.

Each car sale requires dealers to file 20 pages of documentation on a government Web site, a site that was been repeatedly overloaded in inaccessible.

In Washington, the department of transportation has been drowning in paperwork with only a few hundred employees handling almost 275,000 cars sold so far under the clunker program.

By the time Kanes' applications had been approved, the car dealer says there wasn't a Jeep Patriot to be had.

"Just want to sell her the darn cars and I can't. I can't produce them. I can't make them. We told a lot of people that you need to buy them now and they didn't and they didn't get cars," said Blake.

"I'm out a $30,000 deal and two cars. I went in, I did a deal, I had every element of a contract," said Susan Kane.

The dealer denies anyone dropped the ball; says he offered Kane a different 2009 model that she declined and noted he gave her a year's interest on her refunded deposit. That is more money than Tyson motors has received from Washington.

Even as Congress has okayed another $2 billion for the program, many dealers haven't been reimbursed anything yet.

"I don't know of anyone who has gotten reimbursed yet but I don't have question, I don't doubt it," said Blake.

A few I-Team consumer tips:
- No voucher is needed when you go to the car dealer
- Internet scammers have been selling fake vouchers but the dealer takes care of all the paperwork
- Not all dealers are participating, so call ahead. Only certain cars apply; both clunkers and new cars
- proof of insurance is required on your clunker for the last year

Cash for Clunkers Web site: www.cars.gov

Cash for Clunkers hotline : (866-227-7891)

Consumers who believe they have been the victim of Cash for Clunkers fraud can download a complaint form at www.IllinoisAttorneyGeneral.gov/consumers or call the Attorney General's Consumer Fraud Hotline at one of the following numbers:
Chicago 1-800-386-5438
Springfield 1-800-243-0618
Carbondale 1-800-243-0607
Spanish-language Hotline: 1-866-310-8398


Cash for Clunkers tips from The Better Business Bureau on how to participate in the program and avoid getting scammed:

  • You do not need to register or receive a voucher to participate in the program; it is the responsibility of the dealership to fill out all appropriate paperwork.
  • Not all dealers are participating in the program. Participating dealers must register with the Federal government.
  • The program applies toward new cars and trucks that are either leased or purchased.
  • Not all new vehicles will qualify for receiving the credit. The new vehicle must be priced less than $45,000 and passenger vehicles must have a combined fuel economy value of at least 22 miles per gallon.
  • The amount of the credit is $3,500 or $4,500 depending upon the difference between the combined fuel economy of the vehicle that is traded in and that of the new vehicle. The credit will be applied toward the cost of the new car. Trade-ins that qualify must be no older than 25 years and have a combined city/highway fuel economy of 18 miles per gallon or less at the time it was originally purchased. Visit www.fueleconomy.gov to learn the fuel economy of specific vehicles.
  • The trade-in vehicle must have been continuously insured, in accordance with State law, and registered in the same owner's name for the one-year period immediately prior to the trade-in.
  • The program ends November 1, 2009 or until the amount of funds allotted for the program run out.
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