THE TROUBLE WITH CARFAX
JANUARY 23RD, 2009 · BY LOUISGREEN · FILED UNDER: COMMENTARY · CONSUMER NEWS · MISCELLANEOUS

Most people purchasing used cars rely solely on Carfax to let them know whether or not the vehicle they are buying has been wrecked or has other serious problems.  That is understandable because Carfax has created the perception that if there is a problem with a vehicle, it’ll be on a Carfax report.  Car dealers, eager to make sales, are more than happy to perpetuate that perception.

As an attorney who handles automobile fraud cases, I have seen many instances where my clients were shown a clean Carfax for a vehicle, and it turned out to be wrecked anyway.  How does that happen?

Erica Johnson of Canadian Broadcasting’s consumer television show “Marketplace” did a (pardon the pun) bang up job exposing a shady Vancouver, BC car dealer and Carfax itself.

View the segment here.

Ms. Johnson starts by going to the car lot (accompanied by hidden cameras) and picking out a car that she’s ‘interested’ in.  The dealer tells her it has a clean Carfax, stating, “There’s no problems with the car,” and “we want to show you exactly what we’re selling here.”  She eventually test drives two vehicles which really involves showing  them to a Vancouver Police automobile forensic expert for examination.  He finds evidence of accidents and replacement parts on each car.  Next, they run database searches on Carfax’s competitor Autocheck and find reported frame damage for each. Afterward, they go back and confront the dealer who backs off of his claims and admits that Carfax is not reliable (at 8:45 into the video).

My colleague Bernard Brown from Kansas City, MO appears in the piece. Bernard is the lawyer we autofraud attorneys view as the Michael Jordan of our niche for his expertise, generosity in sharing what he knows, and most importantly, his success in obtaining sizable jury verdicts against those involved in the  wrecked vehicle trade. Bernard explains that Carfax receives a patchwork of information that is frequently incomplete.  He further explains that receipt of a ‘clean’ Carfax report causes consumers to let their guard down.

The shady Vancouver dealer invites Ms. Johnson to contact his former (happy) customers, and she takes him up on it.  They do some checking and find a young dude named Darren, and boy do they have some interesting information for him.  Yep, his SUV,  which Carfax reported as accident free, shows frame damage on Autocheck.  Oops. Erica & Crew go with Darren to a garage where a body expert  puts his SUV on a lift and confirms the damage.  Darren calls the dealer on camera and is essentially told that he is SOL, which is a shame because the damage makes the truck unsafe and worth less than he paid for it.

The best part of the segment is Erica Johnson’s interview with  Carfax spokesman Larry Gamache at its headquarters in Fairfax, Virginia.  Mr. Gamache is a cheeky spokesman who looks straight out of DisneyWorld casting.   He shows up early in the piece touting his company as having ‘the most complete information that’s available to consumers today.’

Erica delivers the coup-de-grace later in the segment when she whips out Darren’s clean Carfax report for Mr. Cheeky.  So why is it that Carfax produced a clean report while the competitor showed the damage?  “I think your question you need to ask is why the people who have the information about the frame damage information why haven’t reported it to Carfax yet.”  Oh really?  But wait, there’s more:

Erica Johnson:  “Darren thought the point of Carfax was to let him know whether the truck he was buying had any problems.”

Mr. Cheeky:  “I’m sorry, he was mistaken.”

Pause and consider that statement. Erica Johnson does as evidenced by the incredulous look her face.  Mr. Cheeky’s look is pretty amusing as well. There is more to the exchange, which is found around 16:44 into the video. I encourage you to watch the whole thing.

What is the Take Home Message?  It is this:

A CARFAX REPORT SHOWING THAT A VEHICLE HAS NOT BEEN IN AN ACCIDENT CANNOT BE RELIED UPON, AND DON’T EXPECT CARFAX OR A DEALER TO TELL YOU THAT.  Carfax is as good as the information reported to it.  Helpful negative information about vehicles do turn up on Carfax reports, but unfortunately, Carfax does not always receive all of the information available.

People in the industry know this (or should know this).  Many dealers purport to have knowledge and to rely on Carfax themselves, but they know better, just like the dealer in this report.   Check your jurisdiction, but in most places dealers have an obligation to know what they’re selling before putting it out into commerce. They can’t play dumb after making false representations about the vehicle’s condition.

Be smart.  Be safe.  Do not be lulled to sleep.  If you are interested in buying a used car, have it checked out by a mechanic and body man first.  If a dealer won’t allow you to have the vehicle independently checked out, go somewhere else.  (And don’t sign any arbitration agreements, but that’s a post for another day).

Kudos to Erica Johnson & the people at CBC Marketplace for a well-done, informative piece.

Louis M. Green