Aug 27, 2009 11:00 pm US/Eastern
3 On Your Side: Cash For Clunkers 'Problem Solved'
PHILADELPHIA (CBS 3) ―
The Cash for Clunkers program that just wrapped up has put nearly 700,000 brand new vehicles in people's driveways.
But as 3 On Your Side's Jim Donovan reports, there's a potential problem that some could face down the road.
Days after one man drove off the lot with a new car, he was told - to bring it back!
When second year medical student Charles Sides learned of the Cash for Clunkers program, he was hooked.
"I'd been looking at cars and I was like, this came up, and it was, oh this is perfect you know," Sides said.
He traded in a 1997 GMC Sonoma for a brand new Sonata at Conicelli Hyundai.
To make sure he qualified, Sides said, "they basically wanted proof of insurance for the previous year."
Sides switched insurance companies in '08.
The Conicelli sales team asked him to contact his old company and have it fax proof of his past coverage.
"It was faxed directly to them, and after they got it that's when I was told that I qualified for the program and bought the car," Sides said.
He took the car home, but several days later after his check was cashed, and his trade-in was junked, Sides says the dealer called and told him ... "there was a lapse of insurance in a two-week period in December in between switching companies."
That meant his trade-in didn't qualify.
Conicelli wanted him to bring back his new car or come up with $3,500 he was credited as part of the program.
Charles says the insurance lapse was a surprise to him.
So who is at fault here?
It all comes down to who is responsible for verifying the insurance before the Cash for Clunkers deal goes through.
Attorney Craig Kimmel, who specializes in automotive issues, says in this case, the dealer needs to shoulder the blame.
"If the dealership lets that car go and certifies that the work has been done, and all the insurance is in place, it's the dealership's participation at risk, not the consumers," Kimmel said.
In fact, the National Highway Traffic Safety Administration clearly says "the dealer is required to verify that the car has been insured for a year at the time of the transaction."
While Conicelli received the proof of insurance, apparently no one noticed the gap in coverage until it was too late.
"It seems like the mistake was made on their part," Sides said.
The good news?
After repeated conversations with 3 On Your Side, Conicelli management tells us they have dropped their request that Sides either pay the $3,500 or bring back the car ... making it a 3 On Your Side "problem solved."
Because of the success of this program, dealerships had to deal with mounds of confusing paperwork. So it's not surprising that a problem like this could happen.
Even though the program has ended, thousands of deals are still pending. But if you're driving a new vehicle as part of this program, remember, the dealer assumed the risk.
(© MMX, CBS Broadcasting Inc. All Rights Reserved.)
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