The Checkout

About That Car...

If you've recently entered the used car market, you probably have it drilled into your head to get a vehicle history. For $20 to $25, services such as CARFAX can help you avoid getting stuck with a lemon.

Well, consumers are only as good as the information they have and a class-action lawsuit against CARFAX alleges the Centerville, Va., company's reports are not as thorough as it has led people to believe. It turns out that CARFAX doesn't receive accident reports from every state, but the company's Web site is a little coy about disclosing that fact.

On the one hand, it boasts "our unique database contains more than four billion records" and "we receive information from thousands of public and private sources including all Departments of Motor Vehicles (DMVs) in the United States and Canada."

This is followed by some equivocating in the discussion of its Buyback Guarantee.

"While we'll never know everything about a particular car, a CARFAX Vehicle History Report combined with a test drive and an inspection by a qualified mechanic is a consumer's best protection when buying a used car." [Emphasis added]

It's not until you get to the Frequently Asked Questions section that the truth finally comes out.

In explaining why a particular accident might not show up on a CARFAX vehicle history report, CARFAX offers several reasons, including, "CARFAX does not yet report accidents for that particular state."

According to David A. McLaughlin, one of the attorneys who sued CARFAX, the company doesn't get records from more than 20 states. Nor does it get accident data from the one source that has the most information: insurance companies. As a result, the vehicle history reports are often "incomplete, inaccurate and unreliable."

CARFAX admitted to ConsumerAffairs.com that it gets data from "selected states."

In a proposed settlement of the class action case, the company would have to prominently say in its marketing materials that its reports might not be complete.

Also under the proposed settlement, anyone who bought a CARFAX vehicle-history report before Oct. 27, 2006, may qualify for one of several options. According to ConsumerReports.org, settlement participants would be able to choose from the following:

* Two free CarFax reports within one year of the final settlement
* A free report within two years
* Unlimited number of CarFax reports for 30 days at half the regular price of $24.99
* A voucher for $20 off an inspection by SGS SA, a nationwide inspection company that provides automotive inspections at the buyer's location, in most cases for about $100

A court still has to sign off on the settlement. A hearing is scheduled for April 27.

In the meantime, don't write off vehicle history reports entirely. They can still be useful. Just know their limitations and always take a prospective purchase to a mechanic for inspection before buying.

Have you found gaps in CARFAX reports?

By Annys Shin |  January 22, 2007; 8:30 AM ET Legal Battles/Settlements
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Comments

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Wow, another almost worthless class action settlement! The only value is that they would have to change their language. Chances are if you just bought a car- you would not be looking to buy another one, so what good is getting a report?

Posted by: Chris | January 22, 2007 8:57 AM

Chalk up another one for the lawyers. You can bet they got more than a free car report out of this one.

Posted by: Steve | January 22, 2007 9:28 AM

I got a CarFax report for my current car, which turns out to have been in an accident that wasn't revealed on the report. In retrospect, it makes sense -- a lot of accidents are never reported to police. CarFax told me their guarantee was only in place for cars that had been totaled. What a rip.

Well, their settlement is bogus but I'm suing the dealership, which lied and told me the car hadn't been in an accident.

Posted by: Alice | January 22, 2007 9:45 AM

I always thought Carfax was a scam. Doesn't it seem too good to be true?

Posted by: bkp | January 22, 2007 9:55 AM

Chris is exactly right. i find it ironic that the 3 of the 4 options available are to receive the very same unreliable reports they are being sued in the first place. Are these people f-ing stupid. Its like offering 2 free defective products as compensation for the first defective product.

Posted by: Anonymous | January 22, 2007 10:01 AM

so, does anyone provide an accurate report? or does carfax have a monopoly on this market?

Posted by: jj | January 22, 2007 10:26 AM

I have to agree, the proposed remedy is ridiculous. People who have bought cars -- and if they were looking that long ago they probably have bought by now, whether from CarFax or somewhere else -- have no need of additional reports.

If CarFax was going to buy back any defective cars that consumers bought based on their incomplete reports, THAT would be a real solution. As it is, I can't imagine CarFax is going to suffer all that much from this.

Posted by: SteveG | January 22, 2007 10:32 AM

Yes, it's another scam that there are no good options for compensation. I bought a car last year and found that all three of the cars that I ran in the CarFax database actually were in fairly big accidents but CarFax had no info indicating such for any of the three cars.

Posted by: jt | January 22, 2007 10:33 AM

SteveG has a great idea! Make them buy back the cars- at the price the consumer paid! THAT would be fair for a change. I was actually thinking about getting a car from Carfax, now I am starting to reconsider if they are being shady. When will companies start treating people right?
I went to an antique store in a small town last week and was impressed beyond measure when the manager told me not to buy something because after looking at it he realized it was an overseas knock-off and not a quality item! Such honesty cost him a nice sale, but will earn repeat business! I only wish large companies were like that- but sadly they seem to conspire to keep consumers from having quality choices and thus limit your options to poor products and service, or poor products and service. Like I want a coupon to put even MORE money back in the corrupt and greedy pockets of a large corporation. How is that punitive? Heck, it is a marketing strategy! Screw the customer, then give them a coupon so they can come back for more!

Posted by: Chris | January 22, 2007 11:40 AM

I recently pulled a Carfax report on my own car, as I was preparing to sell it. Imagine my surprise to see an accident reported in a part of the state where my car had never visited - an accident reporting "moderate-to-severe damage". Perhaps I sustained a head injury in that accident and that's why I don't remember it occurring? The same report also omitted an accident that my car *had* been in - in the same state - which resulted in some damage (yes, I did disclose that to the buyer). That accident was definitely reported to the police, as the driver who caused it sustained an injury.

Basically the report was a waste of money, though I'm glad I pulled it, as it could have prevented me from being blindsided by the buyer. I won't be cashing in on my class action settlement any time soon!

Posted by: Marie | January 22, 2007 12:09 PM

My last CarFax reported listed no accidents, but the left-front fender and the bondo on the trunk clearly show otherwise. They're a scam like everything else these days.

Posted by: Andrew | January 22, 2007 12:30 PM

Don't know if anyone provides an ACCURATE report, as jj asks at 10.26, but CarMax provides the Equifax version of car history reporting on their website - for free.

Posted by: jgf | January 22, 2007 1:18 PM

I'll pay a couple hundred more to buy my used car from a dealer with a "certified pre-owned" program. Can the dealer certify a car that is really a lemon? Sure it could. Also, some states have "lemon laws" where it's against the law for dealers to sell cars that they know have issues. At the end of the day, the only thing you can do is take the car to a respectable mechanic and make your buying decision based on their findings. A Carfax report? Nah, I'm good!

Posted by: VTFlyygirl | January 22, 2007 2:23 PM

There are basically two products on the market for Vehicle History, CARFAX & AutoCheck from Experian (the credit report people). CARFAX has the better state Title data which shows if the vehicle has ever been titled a "Salvage", "Flood", or "Not Acutal Miles" type data; but doesn't have data from the insurance companies. AutoCheck has big holes in their title data but has the Insurance data.

So at the end of the day, both reports have certain things that they are very good at and others that they are not so great at. The problem of course is in how they talk about their data and while I agree that they both could do a better job of explaining their weaknesses; I think that the clase action lawsuit is pretty worthless too.

Not a scam, but not perfect either.

Posted by: JAH | January 22, 2007 2:23 PM

I've only gotten one Carfax report, around 2001. Neither the report, nor the dealer disclosed the fact that the car I ended up buying had been in a major accident (T-boned on the drivers side). The only thing it did show is that it had been sold at auto auction. In retrospect, I should have realized that was a bad sign, along with the fact that my used Saturn was being sold at CarMax instead of the Saturn dealer. It had a lot of things wrong with it when I bought it, but I made CarMax fix them and continued with the sale of the car. Six months later, when it was readily apparent that my car was in reality a POS, I took it to the Saturn dealer to get appraised in the hopes of getting a different car from them. They told me that it had been in an accident was wasn't worth what I'd paid for it, but by that time, I owed so much money on the car, it was much too late to do anything about it. I recently paid it off and bought a new car, from the manufacturer.

Posted by: Marissa | January 22, 2007 2:24 PM

I bought a used car with the comfort of having the carfax report. WHat a surprise to find out that my car had been in a major accident, but according to carfax, there was no such incident.

I paid premium for this lexus, and when I traded it in, the dealer would not buy it due to their paint meter. I could not get what I owed.....Carfax is a rip off!!!!!

Posted by: Lloyd | January 22, 2007 2:25 PM

They did miss one important bit of information when I used them to check a used Saturn back in 2004. The car was reported as stolen! Of course, the DMV databases are not all that up to date either. Dealer did the 1st registration in Arizona with no problem. Then I moved to Oregon. They didn't catch it either. Came back to Arizona and this time when I tried to get plates it popped up in the AZ DMV database as a stolen vehicle. All worked out for the best after I spent a couple of hours waiting for the police to check their database. Seems it was recovered but the city never updated their database. Still not catching that a vehicle is reported as stolen makes me take any Carfax report with a grain of salt.

Posted by: Andy | January 22, 2007 2:43 PM

So, why don't Carfax get data from the insurance companies?

Posted by: Nick | January 23, 2007 7:10 AM

My son's car was totaled in an accident several years ago, and I donated it to charity for salvage. Out of curiosity, I looked it up in CARFAX. It did not appear -- and apparently was repaired, resold and retitled. Buyer beware!

Posted by: jsc | January 23, 2007 10:48 AM

I can state unequivocally that the Carfax reports are really not worth the paper they're printed on. Much like Marie & Andrew, I pulled a Carfax report in preparation to sell a car about a year ago. I knew others would, and I wanted to know what was in there to be prepared.

Well, Carfax failed to list one accident the car had been in, and for another one listed that the car had been so badly damaged that the frame had been bent. First off, it made no sense that one accident was reported and one was not since they occurred in the same state (and only about 4 miles apart!). I am a meticulous record keeper and as such I had the police reports and all the documentation from the body shop for both accidents which I happily disclosed to any prospective buyers. The vehicle had never had any frame damage (yes there were two accidents-although Carfax only reported one-which did depress the value of the car) and I had the paperwork to prove it.

When I contacted Carfax, they would hear nothing of correcting the false information despite the reams of documents that demonstrated their error, nor would they tell me the source of said information. I also had a very close friend who's Carfax report reported a mileage rollback on a car that she had owned (as the original owner) for ten years!

Luckily my honesty about the accident that didn't appear and the paperwork from every oil change up to the biggest repairs helped most buyers see past the Carfax inaccuracies, but what about the damage such a misleading report would cause to someone who does not keep as good of records? As evidence, several buyers seemed to think that Carfax was virtually a government agency and couldn't possibly be wrong and looked upon me with grave suspicion for boldly claiming that Carfax was incorrect and producing paperwork to substantiate their incorrectness.

I'll never bother to purchase another Carfax report (and demanded my money back on the one I got). The best bet on a used car is to find a mechanic you trust and take it to him for a detailed inspection. It'll be worth the $50-100 in the long run. If a seller won't let you do that, just walk away!

Posted by: Josh | January 23, 2007 1:15 PM

Sure would be helpful to know the 20+ states that do not report accidnts to Carfax. Why is this being kept a secret? Ms. Shin, you should have dug deeper if you are going to report such an important piece of information.

Posted by: Pete | January 25, 2007 12:21 PM

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