July 22, 2009

Dale Dixon: Don't fall for 'clunker' of ID theft scheme

Don't mistake tempting fraud for government's car trade-in program.

Dale Dixon - Idaho Statesman

Don't mistake tempting fraud for government's car trade-in program.

The TV commercials have started. "Cash for Clunkers could be your chance to dump that old car and get a new one with help from the government." Here we go.

Cash for Clunkers is a legitimate government program. But, as with any program, the scam artists are already lining up. And, as with any government program, there are plenty of rules, hoops and complicated mazes.

Cash for Clunkers allows some old gas guzzlers to be traded in for a credit on new fuel-efficient vehicles.

The real program is called the Car Allowance Rebate System (CARS). However, fraudsters are using catchy names and trying to lure consumers into identity theft schemes. Scams ask for personal information and Social Security numbers to get a "voucher" or a name added to an application list.

Don't fall for it. Only registered new-car dealerships can offer the program.

According to CARS.gov, the dealership applies for the program. Once registered, the dealer is the one who gets reimbursed, not the consumer. If the gas guzzler meets the requirements, a credit amount of $3,500 or $4,500 is taken out of the purchase price of the new vehicle by the dealership. The credit amount generally depends on the type of vehicle purchased and the difference in fuel economy between the clunker and new vehicle.

You may be wondering if your car qualifies. Your trade-in vehicle must have been made within the past 25-years. It must have gotten 18 miles per gallon or less when it was new and now be in drivable condition.

Here are a few tips from your Better Business Bureau to keep you on the right road:

• Avoid anyone who offers a money order, check or direct deposit for the rebate. Car buyers can only benefit from CARS by getting the reimbursement amount reduced from the purchase price of the new vehicle.

• Find the current value of the clunker on your own. If it exceeds $4,500, selling the clunker or a normal trade-in may be a more cost-effective route.

• Know the scrap value of the clunker. If the dealership takes the gas guzzler, it may be able to sell a few specified parts, but the vehicle must be destroyed. Consumers can negotiate the new vehicle price with the clunker but it will only be worth the scrap value to the dealership. Dealerships are required to give consumers a scrap value estimate.

• According to CARS.gov, the program only works for purchasing or leasing new vehicles from a dealership; not used vehicles.

Protect your personal information and understand contracts before signing. When buying a vehicle from a dealership, check out the free BBB Reliability Report on the business at www.bbb.org.

Dale Dixon is president and CEO of the Better Business Bureau, a not-for-profit organization serving Southwest Idaho and eastern Oregon. Reach him at 342-4649 or ddixon@boise.bbb.org.