Beware of Cash for Clunkers Scams


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. The CARS program has proved to be extremely popular; 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.

Unfortunately, scammers are also looking to get a piece of the action from this popular government program. Even before the CARS legislation passed, the National Highway Traffic Safety Administration reported that unauthorized Web sites were soliciting information like names, addresses and Social Security numbers in order to allegedly register people for the program.    BBB’s across the country have also received reports from consumers who have received phone calls with offers for help in filling out the paperwork to receive a voucher to participate in the program. In either situation, the consumer will not receive a $3,500 to $4,500 rebate check in the mail, but will most likely become the victim of identity theft.  To legitimately participate in the CARS program, consumers must trade-in an eligible vehicle and purchase a qualified new car at an authorized car dealership.

“Consumers weren’t the only ones to take quick advantage of Cash for Clunkers, identity thieves have been racing to hook as many victims as they can before the program concludes,” said Tim Burns, Public Affairs Director for the Better Business Bureau Serving Eastern Michigan. “Identity thieves know that because the CARS program is in the headlines and there are some complexities and time limits involved with participating, they can entice sensitive personal information from consumers while looking like they are actually trying to offer them assistance.”

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 deducted from the purchase cost of the new car.  Consumers will not receive monetary compensation for participating in the CARS program.
  • 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 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 the official Web site for the CARS program at for more information. Consumers can also call the CARS Hotline at (866)-CAR-7891 or TTY at (800)-424-9153


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