Beware of “Cash For Clunkers” scams
As of July 31, the initial $1 billion allocated to the “cash for clunkers” program had been nearly depleted and the House passed a bill to provide an additional $2 billion to the program. In the meantime, the program remains in limbo with the National Highway Traffic Safety Administration, the agency that administers the program, unable to confirm or deny if the program is currently operating. However, White House spokesmen have assured consumers that the program continues to run and can still be used.
The program, officially called the Car Allowance Rebate System, or CARS, offers buyers $3,500 and $4,500 off the purchase of a new vehicle when they bring in their gas-guzzling, older vehicles which then are scrapped.
As consumers consider their options, the National Highway Traffic Safety Administration, or NHTSA, the government agency administering the program, cautions them to tread carefully to avoid fraud.
Don’t provide personal data to anyone who isn’t a participating franchised dealer. NHTSA warns that many third parties have built Web sites, offering information on the “cash for clunkers” program, including some sites that end in “.org,” seeming to appear as nonprofit groups. The only official Web site is cars.gov. While some of the information on these other Web sites may be accurate, many of the sites are collecting personal data from the car shopper reportedly to “match” them with a dealer. The NHTSA cautions that consumers participating in the program should not give out personal information to third parties and that they can go to any participating, franchised new-car dealer they choose and work directly with them.
Know your eligibility. Consumers with eligible vehicles qualify for either $3,500 or $4,500 toward the purchase of a new vehicle depending on the fuel economy difference between the old and new cars. This amount is in addition to any rebates or incentives offered by the manufacturer for that model, and dealers are not allowed to use the CARS credit to offset those discounts.
Understand how you are being taxed. The government has ruled that the CARS credit should be handled the same as manufacturer’s rebate. In some states, sales tax will be owed on this amount, while in other states the sales tax will only be collected on the final sales price.
Know what fees you are paying. There are a variety of fees that dealers charge when they are selling a new vehicle. Some, such as registration fees, are required by law. Others, such as a documentation fee, may be fees that a dealer adds to the price to recoup some of his overhead costs and are sometimes negotiable. The CARS Act prohibits dealers from charging a fee to consumers to use the CARS program. However, it does allow dealers to charge their “normal” fees.
Review your contract carefully. As with any new car sale, consumers should review their contracts carefully to ensure that all the financial details are clear. This includes the $3,500 or $4,500 CARS credit, any manufacturer’s rebates or special finance terms, sales tax on the final price and the applicable fees. Whether the “final price” includes the CARS credit depends on the state where the vehicle is purchased.
Consumers who believe that a dealer or third-party contractor or middleman is committing a fraudulent act related to the CARS program should report it to the Office of the Inspector General at the U.S. Department of Transportation at hotline@oig.dot.gov or (800) 424-9071. General questions about the program can be directed to (866) CAR-7891.