I don't think they don't know how to use the preterite, since in written speech it's pretty common, but in common speech it's rarely used--although that depends on region, as SOL-a said.
While the German language has many more tenses, common usage is reduced to three in my experience:
Simple present for present and future events
Present perfect for past events
Past perfect for pre-past events
Again, some regions do use the preterite, but I think that's a minority.
"Haben" and "Sein" are often used in the preterite form, but I think in most of Germany, no other word is. I can only make sound statements about my own region, but using the preterite for any other word here would give the impression that you are from the 18th century.
I don't think people have forgotten how the preterite is formed, but they may struggle with how to correctly use it in written speech.
Thank you for correcting mistakes!