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

September 15, 2009

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 offers the following guidance for car shoppers on how to participate in the program and avoid getting scammed.

The CARS program has proved to be extremely popular; according to the New York Times, it generated more than $920 million in rebates and more than 220,000 in auto sales.  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.

“As consumers have been quick to take advantage of the new program, so have identity thieves,” said Karen Nalven, BBB President. “Since the program is new, identity thieves know that they can gather 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 Web sites were soliciting information like names, addresses and Social Security numbers in order to register people for the program.  The BBB serving Louisville 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 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

For more advice on purchasing and maintaining an automobile, visit

About BBB
BBB, the leader in advancing marketplace trust, is an unbiased non-profit organization that sets and upholds high standards for fair and honest business behavior. Businesses that earn BBB accreditation contractually agree and adhere to the organization’s high standards of ethical business behavior. BBB provides objective advice, free business BBB Reliability ReportsTM and charity BBB Wise Giving ReportsTM, and educational information on topics affecting marketplace trust. To further promote trust, BBB also offers complaint and dispute resolution support for consumers and businesses when there is difference in viewpoints. The first BBB was founded in 1912. Today, 125 BBBs serve communities across the U.S. and Canada, evaluating and monitoring more than four million local and national businesses and charities. Please visit for more information about BBB.