• Aug 24, 2010
Where there's money, there's fraud, and that appears to have been true with last year's Cash for Clunkers program. According to a report from USA Today, the federal government is investigating around 20 dealers that may have violated the terms of the car-swapping scheme. So far, a total of nine dealerships have paid $71,500 in fines as a result of the National Highway Transportation Safety Administration's findings.

In some cases, NHTSA suspects that vehicles meant for the scrap heap were actually shipped overseas and resold. Unsubstantiated reports claim that around 24 vehicles slipped out of the country in this fashion. Meanwhile, some junkyards have still yet to provide proof that other vehicles were in fact destroyed – a key piece of the process.

USA Today says that of all of the Cash for Clunkers claims, around 3.3 percent of the group have some sort of problem with their paperwork that may impact around $94 million in rebates. Even so, NHTSA says that there is no widespread fraud issue with the Cash for Clunkers program, and that the issues it has turned up are due to a few bad dealerships trying to work the system.

[Source: USA Today | Image: Justin Sullivan/Getty]


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  • 32 Comments
      • 4 Years Ago
      http://www.autoblog.com/2009/09/24/shed-a-tear-for-clunkers-that-deserved-better/

      I believe that is a pertinent link that autoblog forgot. If I were investigating I'd probably start there.
      • 4 Years Ago
      Called it.

      • 4 Years Ago
      Nine dealers committed fraud, and only paid an average of $8k apiece? Even assuming each one only took in one clunker, that would mean that each dealer had taken $3500 or $4500 from the government as part of a new car sale, and then made another grand or two from selling the clunker on the side. That means they paid in fines only about the same amount that they pulled in - and that's assuming they only did it once. Hardly much of a disincentive for committing fraud. The way I see it, they all out to go to jail and pay at least 10 times what they pocketed from the deal.
        • 4 Years Ago
        Well you gotta remember the 3500/4500 isn't profit to the dealer, but profit to the customer. An 18,000 car is sold for 14,500 out of pocket from the customer and the 3500 is covering the difference because of the program. If everything goes by the books than the dealer will make the same as selling without the CFC program per car. Dealers could of legally made additional money by selling the car for salvage parts to the junk yard, from what we've seen that was an additional $50-$$200 profit to the dealer. Ofcoarse if customers knew about that then they could also negotiate the salvage value for their benefit.

        Also remember these CFC cars were usually not best of conditions or high in demand cars. Selling over seas would not always mean $1,500 profit when considering the type of cars the CFC brought in and the fees it would need to cover to ship these cars over seas.

      • 4 Years Ago
      very stimulating, for lawyers.
      • 4 Years Ago
      Frankly I am suprised we aren't hearing about more abuse. Chances are we would see lot's of it if we looked closer.
      • 4 Years Ago
      I remember driving by those cars in Vacaville, CA.

      Still Fraud in the US Government Program? *shock!*
        • 4 Years Ago
        I was going to post that. Jelly Belly Factory Tour FTW!!!
      • 4 Years Ago
      Big government programs and fraud are two peas in a pod.
      • 4 Years Ago
      The true crime is that clean looking 3000gt sitting in the picture being a clunker. Such a beautiful car and so young to be labeled as junk.
        • 4 Years Ago
        Speaking of VR4, I saw one of those rare cars on my way to work LOL. Sadly I was in my "G mobile" (benz) instead of my lets race ride (camaro).

        It had a modified exhaust and I believe it had a bigger FMIC on it, couldnt look to hard traffic on 285, was clean though.
        • 4 Years Ago
        I spotted that too.
        I can only hope that it's a FWD. Crushing an AWD (espectially a TT) should be criminal.
      • 4 Years Ago
      Really, you mean there was room in this government program for fraud!?!?!?!? Say it ain't so!!!
        • 4 Years Ago
        So, I want to make sure I have this correct....
        The US government collects taxes from the people. The government then turns around and gives 8 grand to people in exchange for their old cars. So, now they have a bunch of clunkers that aren't worth what they paid for them. So, what do they do with these cars that they paid too much for.... They order them destroyed!!! (which cost more money). Plus, they are still working on verifying all these C4C exchanges. Can you imagine how many resources have been used over the past year to verify all of these?!?!?! Of course, this was all to help bail out the auto makers which they own.

        Is't this kinda like letting your kid open a lemonade stand with the lemon's you already bought and then walking around to the neighbors and giving each of them a dollar so that they can go buy lemonade from your kid. Then, you convince yourself that your kid started a profitable business even though you bought all the lemons and you paid for your neighbors to buy lemonade from them. Your kid made $5 even though you spent $10 on lemons and you spent $5 on the lemonade.
        • 4 Years Ago
        Just because some people can defraud something doesn't mean the whole thing is a bad idea. People will try to work the system with anything that contains money. Just like the article said, "Where there's money there's fraud." At least they seem to be catching people.
        • 4 Years Ago
        This doesn't surprise me at all. A lot of the comments on the C4C stories in this very blog were from people who felt like the destruction of so many fine automobiles was "criminal" in a sense, especially when that list of vehicles came out that should some very rare and highly sought after vehicles on it.

        Maybe some other people thought the same thing and went down to the dealerships and waved a wad of cash under the nose to get one of these cars. Maybe those people knew they were defrauding the program and deserve to be punished as well. Maybe it takes two to tango.
        • 4 Years Ago
        What are clunkers?
        well, uh, Mr Prime Minister....
        I KNOW WHAT CLUNKERS ARE. Just so we are clear, you cannot pay us in clunkers
        • 4 Years Ago
        LOL yeah. The real surprise is that it took this long to start.
        • 4 Years Ago
        Or that car dealers can't be trusted with goverment money? Crazy..
        • 4 Years Ago
        I can't believe car dealers would try to take advantage of the government in that way. It's not like we've heard of dealerships having deceptive practices before, right?
        • 4 Years Ago
        Yes but I think the point was that your kid has something do for the summer and $5 in money to buy stuff with. Or in the real world, people got to keep their jobs in the auto industry and had money to buy food and pay rent with. It might not be efficient or fair at all but that was a period of time where the economy was basically teetering on the brink.
      • 4 Years Ago
      ...and in other news, water is wet, and yes, a bear does take a dump in the woods...
      • 4 Years Ago
      Instead of destroying cars sending them to some third world country would have been better.
        • 4 Years Ago
        How does that help with emissions? Not saying you are wrong or that is a bad idea, but wasn't one of the points to take low mpg vehicles off of the road?
        • 4 Years Ago
        @Epyx

        It may get some of the dirty old cars off the roads over there, not that I would support such an expensive program, but it would have been better than the "Automobile Holocaust" that was C4C.

        In the end, this dud of a program had just as much to do with selling cars as it did "saving the environment". They just threw that in to satisfy the "Greenies" that worship Obama for some reason!! Or was it the other way around?
      R. M. Blythe
      • 4 Years Ago
      I saw this Cash for clunkers scam coming. I know loads of dealers that shipped, stripped parts to sell to bodyshops and the insurance underwriters turned a blind eye. My buddy got an engine and transmission for his BMW.
      Loads of cars ended up in Philippines, Indonesia and even North Korea via South Korea
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