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?
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