Don’t Get Scammed When Participating in Federal Cash for Clunkers Program

Chicago, IL-July 24, 2009 - The Car Allowance Rebate System (CARS) or Cash for Clunkers program provides a rebate for consumers who trade in qualifying gas guzzlers for more energy efficient cars. This rebate offer is set to officially run from July 24, 2009 – November 1, 2009, or until funding runs out.

There is no official “participating dealer” program for CARS; all legal car dealers are eligible to register. Consumers do not have to pre-register for CARS. Any Web site that asks dealers or consumers to provide information for this program without making that fact clear is misleading. National Highway Traffic Safety Administration (NHTSA) is responsible for developing the rules for program implementation and setting up a means for registering dealers to participate in the program. Cars.gov is the only official CARS Program Web site.

“Local auto dealers are advertising and setting up their own Web sites to promote their participation in the program. Make sure you know who the company is before you request more information or ask to be referred to a dealer,” states Steve J. Bernas, president & CEO of the Better Business Bureau serving Chicago and Northern Illinois. “Legitimate marketing of the ‘Cash for Clunkers’ program will never require someone to provide a Social Security number or financial information. It would only be required at the dealership during the purchase or leasing of a new vehicle.”

The BBB has seen new-vehicle advertisements by dealers and manufacturers where amounts attributable to the CARS voucher program are deducted from the advertised price of vehicles. That is a violation of the Illinois Motor Vehicle Advertising Regulations. The federal Car Allowance Rebate System allows for $3,500 or $4,500 vouchers for consumers with qualifying trade-ins and new vehicles. But many consumers will not qualify for the vouchers. Therefore, an advertisement that includes a deduction of either voucher amount from the advertised price of new vehicles violates section 475.310 of the state regulations because not all consumers will be able to purchase the advertised vehicles at the advertised price. The BBB advises both dealers and manufacturers against deducting any amount from the advertised price of vehicles that is attributable to a CARS voucher because not all consumers will be able to purchase the advertised vehicles at the advertised price.

The Better Business Bureau offers the following guidance for car shoppers on how to participate in the program and avoid getting scammed:

• You do not need to register or receive a voucher to participate in the program; it is the responsibility of the dealership to fill out all appropriate paperwork.

• Not all dealers are participating in the program. Participating dealers must register with the Federal government.

• The program applies toward new cars and trucks that are either leased or purchased.

• Not all new vehicles will qualify for receiving the credit. The new vehicle must be priced less than $45,000 and passenger vehicles must have a combined fuel economy value of at least 22 miles per gallon.

• The amount of the credit is $3,500 or $4,500 depending upon the difference between the combined fuel economy of the vehicle that is traded in and that of the new vehicle. The credit will be applied toward the cost of the new car.

• Trade-ins that qualify must be no older that 25 years and have a combined city/highway fuel economy of 18 miles per gallon or less at the time it was originally purchased. Visit www.fueleconomy.gov to learn the fuel economy of specific vehicles.

• The trade-in vehicle must have been continuously insured, in accordance with State law, and registered in the same owner’s name for the one-year period immediately prior to the trade-in.

• The program ends November 1, 2009 or until the amount of funds allotted for the program run out.

“Not only were some consumers quick to take advantage of the new program, but scammers didn’t waste any time either,” said Bernas. “Because the program is new, identity thieves know that they can cull sensitive personal information from consumers while looking like they are actually trying to offer assistance to participate in the program.”

Additional restrictions apply and BBB recommends consulting the official Web site for the CARS program at www.cars.gov for more information. Consumer can also call the CARS Hotline at (866)-CAR-7891 or TTY at (800)-424-9153