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BBB: Guidance to Avoid Scammers in Federal Cash for Clunkers Program

In late June, President Obama signed into law the Car Allowance Rebate System (CARS) or Cash for Clunkers program. CARS provides a rebate for consumers who trade in qualifying gas guzzlers for more energy-efficient cars. Unfortunately, even before the program began, scammers were attempting to ply their trade; and Better Business Bureau (BBB) offers the following guidance for car shoppers on how to participate in the program and avoid getting scammed. Car shoppers burned through the $1 billion that was initially set aside for the program and the federal government had to quickly appropriate an additional $2 billion to keep the program going.

“Not only were some consumers quick to take advantage of the new program, but scammers didn’t waste any time either,” said Claire Rosenzweig, president and CEO of the Better Business Bureau Serving Metropolitan New York. “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.”



Even before the legislation passed, the National Highway Traffic Safety Administration reported that websites were soliciting information like names, addresses and Social Security numbers in order to register people for the program. The BBB has received reports from consumers who received phone calls with offers for help in filling out the paperwork to receive a voucher to participate in the program. BBB offers the following guidance to car buyers on the basics of the CARS program:

• 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 than 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.

Additional restrictions apply and BBB recommends consulting www.cars.gov for more information. Consumers can also call the CARS Hotline at (866)-CAR-7891 or TTY at (800)-424-9153. For more advice on purchasing and maintaining an automobile, visit www.bbb.org.