Beware of ‘cash for clunkers’ scams

The government is warning consumers to be wary of unofficial "cash for clunkers" Web sites that seek personal information or direct consumers to pre-register for the program.

According to a traffic safety spokesman with the National Highway Traffic Safety Administration, some bogus Web sites have offered pre-approval sections that request a consumer's Social Security number and other personal information. In fact, however, dealers and consumers do not need to pre-register for the program.

The traffic safety administration has given information about these unofficial sites to the Justice Department's Internet Fraud division.

Under the Car Allowance Rebate System (CARS), buyers stand to receive up to $4,500 toward the purchase or lease of a new car or truck that meets the necessary criteria.

For passenger automobiles, the car to be traded must be drivable, have a fuel economy rating of 18 miles-per-gallon or less, and be registered and insured for the full year prior to the trade in. To get a rebate, the new car must be priced at $45,000 or less, and, to receive the maximum rebate of $4,500, the new car must have a fuel economy rating of at least 10 miles-per-gallon greater than the car to be traded. To receive an incentive of $3,500, the same car would be traded for one that gets at least four miles-per-gallon better gas mileage.

For most vans, SUVs and pickups, the vehicle to be traded must have a fuel economy of 18 miles-per-gallon or less. To receive an incentive of $3,500, the new vehicle must get at least two miles-per-gallon better mileage. To receive the $4,500 incentive, the same vehicle would need to be traded for one getting at least five miles-per-gallon better mileage.

The purchaser does not receive the money directly from DOT. Instead, the dealer reduces the purchase or lease price by the allowed amount, and the government reimburses the dealer for that amount.

The incentive program begins July 1, 2009. The final day for an eligible purchase or lease is November 1, 2009, or when DOT exhausts the funds set aside for the program, whichever occurs first. The credit is not retroactive prior to the start of the program and cannot be applied toward the purchase of used vehicles.

To achieve the objective of removing older, less efficient vehicles from the roads, vehicles traded under this program will have to be permanently disabled and/or scrapped. Provisions successfully lobbied by the Specialty Equipment Market Association (SEMA), however, protects vehicles 25-years old and older from the scrappage program and expands parts recycling opportunities.

Lawmakers intended the program to last about one-year, but were only able to provide $1 billion in funds through the end of October 2009. Lawmakers will pursue another $3 billion later this summer to fund the program into 2010.

CARS will be implemented by the U.S. Department of Transportation's National Highway Traffic Safety Administration (NHTSA).

Consumers can learn more about CARS or the gasoline mileage attained by individual vehicles, at www.cars.gov or by calling NHTSA's Vehicle Safety Hotline at 1-888-327-4236.