Surprise (Not) - Fraud Alleged in Cash-For-Clunkers Program
By Bill Visnic August 25, 2010The revelation in today's reporting from USA Today isn't that fraud is being investigated in last summer's controversial Cash-For-Clunkers stimulus program. The real surprise is that there might be so little of it.
The paper reports that as much as $94 million in Cash-For-Clunkers claims submitted by auto dealers may be invalid due to improper documentation. But that's a miniscule portion of the $3 billion the Car Allowance Rebate System paid some 678,000 people to purchase a new vehicle during July and August last year.
The National Highway Traffic Safety Administration said there is no evidence of systemic fraud now that the government has reached the enforcement phase of the CARS program, but nine dealers have paid a total of $71,000 in fines for various misdeeds.
Some instances of alleged fraud include shipping of traded-in "clunkers" overseas and, as many suspected, a not-very-reliable paper trail to prove that traded-in clunkers were scrapped. Of 22 junkyards questioned by federal inspectors, seven had not submitted proper scrappage documentation to the federal database that compiles ownership title information.
An inspector general's audit of Cash-For-Clunkers claims filed by dealers extrapolated that 3.3 percent were lacking proper paperwork, leading to the $94 million of potential erroneous or fraudulent claims. But the office's report said not all of that percentage could be bad deals; with extra documentation, some might yet turn into valid transactions.
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