What are the rules for ARC's?  I just received one and I'm pretty sure I read somewhere on this site that they are not allowed to be swapped.

They're not allowed.

I have received 2 and each time the person didnt return my credit so I just read them and accepted the fact I couldnt repost them.

http://www.paperbackswap.com/help/search.php?terms=arc

everything you need for using this site is in the help tab up above.

But, by not reporting them you encourage them to keep breaking the rules!  The only way people will change their behavior is to have them suffer the consequences!

1st do the RWAP thingy so you can get your credit back somewhere down the line

inform the sender that ARC's are not allowed to be posted and are not allowed to be sent even as freebies or trades......

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The Link Charles gave above says it all.
Repeated here (thanks Charles!)
http://www.paperbackswap.com/help/search.php?terms=arc 

Yes, it's a RWAP -- If the sender doesn't make it good, I would definitely contact the PBS Team.

She returned my credit.  However, I was asked by PBS to take a digital photo of the book cover and attach it to an email to PBS so they could explain why ARC's aren't allowed.  ????   I told them the truth - I'm old, I use a desk top computer, I have a land line phone and a camera that uses film.  I also suggested to them that it really wasn't my responsibility to tell the sender that into - it's the PBS site.  Waiting for responses meant I couldn't get into my account all day.  All is well now.  The whole thing seemed funky to me.