This article discusses dealer responsibility under the Cash for Clunkers program (officially called the Car Allowance Rebate System, or CARS) made possible by the Consumer Assistance to Recycle and Save Act of 2009.
Government Stimulus Program Documentation
Car dealers must register with the National Highway Traffic Safety Administration (NHTSA) in order to participate in the Cash for Clunkers program, and participating dealers are charged with a high level of responsibility. In order to receive reimbursement for any vouchers issued to consumers, dealers must perform the following tasks:
- Ensure trade-ins are in drivable condition.
- Verify the accuracy of vehicle insurance and registration information provided by the customer.
- Take steps to guard against fraud, including verifying the identity of individuals who purchase vehicles so no one will be issued more than one voucher credit.
- Verify the eligibility of trade-ins and new vehicles purchased. This means that dealerships must be knowledgeable about the combined fuel economy ratings of trade-ins and new automobiles.
- Follow through on disposal of trade-ins. Based on the act’s language, it appears that dealers and/or scrap yards may be able to salvage certain car parts before the destruction process is commenced. Dealers should look for further guidance from the government on this matter.
Cash for Clunkers Incentive Program – Participating Car Dealer Responsibility
Car dealers are charged with obtaining the paperwork above to verify a consumer’s eligibility under the Cash for Clunkers program. Car dealerships will only be reimbursed for the appropriate voucher amount upon the NHTSA’s approval of any required paperwork.
A risk for car dealerships is that an unscrupulous customer may try to get more than one voucher by visiting multiple dealerships. Therefore, dealers must be extra vigilant in this regard. It is likely that the NHTSA will require dealerships to verify participating customers’ identities and submit that information along with other paperwork for voucher reimbursement. That way, the government can keep track of individuals who try to obtain more than one voucher.
The NHTSA has indicated that it is trying to balance speed of reimbursement with fraud prevention and also warns than any dealer who attempts to defraud the government under this program may face prosecution.
Information for Car Dealerships on cars.gov
Auto dealers interested in participating in the program can expect to find the following information on cars.gov by July 24, 2009:
- Explanation of how dealers will receive reimbursement under the program.
- How to dispose of trade-ins.
- Information on how to become a registered car dealer.
- Ways to enforce program requirements, including steps to guard against fraud.
List of Participating Auto Dealers
After a dealer registers with the program, consumers should be able to find the participating dealership listed on cars.gov (once the list of participating dealers has been published online). For the sake of thousands of American consumers, hopefully, dealerships will find that the benefits of registering with the Car Allowance Rebate System outweigh the hassle of verifying customer eligibility for the program.
More articles related to 2009 government car stimulus incentives:
2009 Federal Car Tax Rebate in No Sales Tax States
Government Car Rebate & $3,500 or $4,500 Voucher
Resources:
Consumer Assistance to Recycle and Save Act of 2009
Day One Notice retrieved from cars.gov on July 7, 2009
Lena Gott - Lena Gott is a Certified Public Accountant who gives practical financial advice to her readers.
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