CASH FOR CLUNKERS COULD BE OPPORTUNITY TO SHAFT BUYERS TWICE; ONCE BY THE GOVERNMENT AND ONCE BY THE DEALER! SO WHAT'S NEW?

The enticing advertisement stated that you will get up to $4,500 for your clunker! So you gave up the clunker, but the dealer who was counting on getting the money from the government under that "great" successful idea DID NOT RECEIVE IT. I am waiting for the cash for stereos and mattresses and cash for refrigerators, and cash for lawnmowers, and cash for old yard pools, and cash for old shoes and suits and cash for leisure suits...why not!?

With big government, so far that was the ONLY big idea that actually worked even though it was just giving my money to others for FREE! Why not give away more money for literally everything. let's just get new stuff with the government buying our old stuff?

Sometimes, a dealer will not be able to collect the cash due to ineligible buyers etc., or for other reasons, and then can demand that the customer come up with the money that was due to be paid to the dealer by the government.

So, in actuality, the buyer can be shafted twice..once by the government and once by the dealer! So, what else is new?

Now the government is telling dealers how to run their business.

The U.S. Department of Transportation is advising consumers taking advantage of the “Cash for Clunkers” program not to sign contingency agreements promising to pay back up to $4,500 if dealers don’t receive payment from the government.

No contingency agreement is required to participate, the Transportation Department, which administers the $3 billion Car Allowance Rebate System, said on its Web site.

The Minnesota Automobile Dealers Association has a form on its Web site that members can use as part of a new-car closing. By signing the form, the buyer agrees to reimburse the dealership the incentive amount if the dealer is unable to obtain the credit from the government “for any reason.” The consumer can also return the car to the dealership and pay “a reasonable charge” for use of the new vehicle, according to the form.

Consumers signing the agreement also acknowledge their trade-in vehicle may have been destroyed and can’t be returned.

Dealers may be acting improperly by asking consumers to keep their old cars until credits for their vehicles are approved by the National Highway Traffic Safety Administration, the Transportation Department said on its Web site. If the new car is in stock, the dealer must allow the buyer to take possession before the paperwork for the credit can be submitted, the department said.

Cash Demands

In some cases, dealers are demanding $4,500 in cash to avoid reporting the car as stolen when the government credit doesn’t arrive, said Rosemary Shahan, president of Sacramento, California-based Citizens for Auto Reliability and Safety.

Gloria Sharp of Woodbury, Minnesota, traded in her Jeep Grand Cherokee for a new Honda Accord and said she was called a few days after the deal closed and asked for more money. The government rejected the credit, but the problem turned out to be on the dealer’s end -- they had mistakenly applied for $4,500 instead of $3,500, she said.

“They said if we didn’t give them the money, they wouldn’t submit the paperwork,” Sharp said.

San Francisco-based Consumer Action joined Shahan’s group at a news conference to ask the Department of Transportation, which administers the program, to prohibit dealers from forcing consumers to sign agreements that promise payments if the reimbursements don’t show up.

‘Bait and Switch’

“These practices are a form of ‘bait and switch,’” the groups wrote in a letter to Transportation Secretary Ray LaHood today. “Car buyers are particularly vulnerable to the dealers’ pressure because they have surrendered their traded-in vehicle and lack access to reliable information about whether or not the deal was approved by the government.”

Minnesota Automobile Dealers Association Executive Vice President Scott Lambert said the group would continue using the contingency form. The government hasn’t said the form can’t be used, and dealers have to protect their interests with so much uncertainty about the program, he said.

“I don’t think it’s NHTSA’s job to get between the customer and the dealer,” Lambert said. “If the consumer doesn’t want to sign the agreement, they can walk away.”

The state’s 250 participating auto dealers have submitted about $42 million in unprocessed credits, Lambert said. Deals are getting rejected by the government on technicalities and about 10 percent of Minnesota’s dealer claims have been accepted, he said. For the entire country, it’s about 2 percent, he said.

A Mess

“This program is administratively a mess,” Lambert said. “The dealerships are having a terrible time.”

Charles Cyrill, a spokesman for the National Automobile Dealers Association in McLean, Virginia, had no immediate comment.

The clunkers program is intended to spur new car sales and help revive the ailing auto industry. The program’s initial $1 billion was exhausted about a week after it formally began and President Barack Obama signed a bill approving an additional $2 billion on Aug. 7.

Lawmakers had expected the program to generate about 250,000 vehicle sales with enough money to last until Nov. 1. Consumers can receive up to a $4,500 credit for trading in an older car for one with better gas mileage, when certain conditions are met.

The government has received 316,189 applications for credits as of yesterday, according to the Transportation Department. The total dollar value of the submitted applications is $1.32 billion.

Congress intended that consumers get a good deal in return for trading up to more efficient vehicles, Shahan said. Dealers are using the program to reel consumers back into the showrooms to pay extra cash, a practice sometimes referred to as “yo-yo” financing, she said.

“This is yo-yo financing on steroids,” Shahan said.