A national consumers group is concerned that some auto dealers might be requiring car buyers in the “cash for clunkers” programs to sign waiver documents that are a form of bait-and-switch.
Some customers, including Colorado buyers, are being asked to sign waivers stating that they are responsible for paying the dealer $3,500 or $4,500 if the government doesn’t reimburse the dealer for the sale.
The “cash for clunkers” program, formally known as the Car Allowance Rebate System, provides rebates of those amounts to purchasers who trade in gas guzzlers for more fuel-efficient cars.
Waivers aren’t forbidden, but the U.S. Department of Transportation said customers don’t have to sign them to qualify for the deal.
“If it isn’t illegal, it ought to be because it’s like false advertising,” said Rosemary Shahan, president of Consumers for Auto Reliability and Safety, a Sacramento, Calif., nonprofit. “They’re advertising this deal, which is luring people into showrooms, and then they’re wanting to change the terms.”
Tim Jackson, president of the Colorado Automobile Dealers Association, said most of Colorado’s dealers are asking consumers to sign waivers.
“All the dealer is doing is protecting against a situation in which the government doesn’t pay,” Jackson said.
He said that often, the dealers are keeping the “clunker” until the transaction has been approved.
“It wouldn’t be that the customer would be out the money but that the dealer would have the right to unwind the deal,” Jackson said.
Jack TerHar, president of Sill-TerHar Motors in Broomfield, said he’s sold about 60 cars under the “cash for clunkers” program, and he’s now waiting to receive about $270,000 worth of rebates.
“Everything is still in pending status,” TerHar said. “It’s a little frustrating, but we kind of anticipated that this was going to be a challenge.”
He said he does not require consumers to sign waivers.
Lawyers say the situation could lead to lawsuits, especially if a customer signs a waiver without realizing it might be a binding contract.
“I think it’s going to put car dealers in a position where they’re going to be suing consumers for money that they don’t have, or they’re going to be repossessing a lot of cars,” said Rick Wynkoop, a Denver lawyer who specializes in auto fraud. “It’s going to get very complicated.”
Sara Castellanos: 303-954-1381 or scastellanos@
