BBB Cash for Clunkers Alert

Car Dealers, Not Consumers, Get Cash for Clunkers

Con artists are taking advantage of consumers who would like to participate in the well-publicized Cash for Clunker’s program offered by the U.S. government. It allows consumers to trade their old gas guzzlers for credit towards a new fuel-efficient car. The House has voted to extend the program and the Senate is predicted to do so later this week. In the meantime, your Better Business Bureau advises the public to do their homework before trying to cash in on a new car.

The current scam is a take off on the usual attempts to obtain consumers’ personal information in order to steal their identity. The twist: con artists ask for social security numbers claiming they will give the consumer a voucher or have their name added to an application list. The catch: voucher’s don’t exist.

The program’s full name is the Car Allowance Rebate System (CARS). According to CARS.gov, it is the registered dealer who may apply for the program. The auto dealer gets reimbursed, not the consumer. If the consumer’s car meets certain requirements, a credit of $3,500 or $4,500 is deducted from the purchase price of the new vehicle by the dealership. The credit amount depends on the type of vehicle purchased and the difference in fuel economy between the old and new vehicle.

Your BBB has the following tips about the CARS program:

• Don’t do business with anyone offering a money order, check or direct deposit. Consumers can only benefit from the program by getting the reimbursement amount reduced from the purchase price of a new vehicle.
• Find out the current value of the car. If it exceeds $4,500, selling it or using it for a normal trade-in may be more cost-effective.

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• Know the scrap value. When the dealership takes possession of the car, it may be able to sell specific parts, however the majority of the vehicle must be destroyed. As a result, consumers can negotiate the new vehicle price with the clunker but it will only be worth the scrap value to dealerships, which are required to give consumers a scrap value estimate.
• The program only works for purchasing or leasing new vehicles from a dealership. The program does not apply to used vehicles.
• Protect your personal information and understand contracts before signing. When purchasing a vehicle, get buying tips and a free BBB Reliability Report on the business at www.bbb.org.

Consumers can learn more by visiting the Transportation Department’s Web site at www.cars.gov or by calling their toll-free number, 866-227-7891.

CARS-related schemes at www.cars.gov. Internet or e-mail based scams can be reported by visiting www.ic3.gov.