The Car Allowance Rebate program recently enacted by the federal government, under the more common term, “Cash for Clunkers," is a one billion dollar economic relief program intended to help consumers in financial trouble by offering them financial incentives to purchase more fuel-efficient vehicles.
The car allowance rebate system allows consumers to trade in their old vehicle for a new higher-mileage vehicle. A qualifying consumer will then receive a deep discount on the purchase price of a new car from the participating dealer. Under the program, car dealers must also provide consumers with any other advertised dealer discounts they are currently promoting, in addition to the instant rebate consumers receive under the cash for clunkers program.
Participating consumers can receive an instant credit of $3,500 or $4,500 with the purchase or lease of a new vehicle. Finally, consumer trade-in vehicles must be documented, registered, and properly insured to qualify for the federal program.
Currently, about 35% of all new car buyers are said to qualify under the new federal program. This is good news for the suffering auto industry and for their national network of cash-strapped car dealers. However, it can be bad news for the millions of consumers who wish like to benefit from the program, but cannot, because their vehicle does not qualify under the terms of the trade-in program.
Given the steep decline in the economy and the apparent hunger for a sweet car deal, consumers who are not familiar with the many details of the program have been falling victim to identity theft scams.
In the past year, fake purchase-on-line car websites have been promising large rebates and price cuts on models that do not legally qualify under the program. In fact, there are over fifty car models that currently do not qualify under the rebate program making the scam that much more credible to consumers.
Scam artists have been targeting consumers who own vehicles that do not qualify under the federal program and by promising them a way to qualify by participating in special dealer financing for their new vehicle. The consumer is then asked to fill out a detailed credit application to see if they can otherwise qualify for the program. The credit application however is nothing more then a thinly veiled attempt to steal a consumer’s social security number and credit card information.
Here are few tips on how you can protect yourself from such scams. First, try not to do business with people or businesses you do not personally know. Ask your friends and family for a trusted recommendation. Second, be especially suspicious of dealerships that offer you cash back in the form of money orders, checks or direct deposit. The program does not work that way. Under the program buyers can only benefit through a dealer reduction of the vehicles purchase price, not from the return of cash from the dealer to the consumer. Finally, you should know the program only applies to the purchase or lease of new vehicles and does not apply to the sale of used or pre-owned vehicles.
Consumers should report fraudulent attempts to obtain their personal credit information by contacting law enforcement as soon as possible. For more information on consumer rights, car buying, federal assistance programs, lemon law and participating car dealerships, visit GotTrouble.com