Cash For Clunkers Fraud

04.08.2010 | Author: Alexander Williams | Posted in Law

“Cash for Clunkers” is the common name for the federal stimulus program officially known as the Car Allowance Rebate System, or CARS. When the economy went downhill, the federal government approved the CARS program as a way to both stimulate the failing automotive industry as well as reduce our overall negative impact on the environment. Frustratingly, though, some people defrauded the government through Cash for Clunkers, which cheated other citizens out of this helpful program.

With the Car Allowance Rebate System, the government appropriate several billion dollars to help people purchase new, more fuel-efficient vehicles. The government set up regulations in order to make sure that people used their CARS credits for new cars better than their old clunkers. Cash for Clunkers received a huge amount of interest, and the federal funding ran out in about a month. Even after additional funds were appropriated for CARS, they were quickly used up as well.

Originally, Cash for Clunkers allowed people to trade in specific older vehicles in order to receive a $4,500 credit. They had to put this credit towards a newer, more fuel-efficient vehicle. However, because of the intense popularity of Cash for Clunkers, the National Highway Transportation Safety Administration was unable to begin processing CARS applications until after the program ended. Now, they have realized that many applications were incomplete or even incorrect. This means that dealerships and individuals defrauded the government.

There are several different ways in which the government suffered from fraud through Cash for Clunkers. Some types of CARS fraud includes:

  • Allowing trade-ins that were not drivable
  • Accepting trade-ins that were not part of the government’s approved list
  • Accepting vehicles that were uninsured
  • Ignoring the price limitations placed on the program
  • Giving multiple credits per person
  • Allowing people to purchase RVs, ATVs, and other vehicles rather than new, fuel-efficient cars as outlined by the program
  • Failing to send the older vehicles to an official disposal center

    • Perhaps one of the reasons why Cash for Clunkers ended so soon was because the government funds quickly ran out due to fraud. This robbed citizens of their opportunities with this program. If you know of any dealerships or individuals who committed Cash for clunkers fraud, you can take them to court on behalf of the government. If your case succeeds, you can earn part of the damages awarded to the government.

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