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CarFax Gets Its Facts Wrong

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Dealers tell me horror stories about CarFax experiences with customers. Those range from missing information to erroneous information.

I have a problem with data pirates who use dealer information against us, damage our reputation and cause consumer distrust.

To me, CarFax is high on that list. Let’s look at what this vehicle-history firm does.

It tells consumers its reports are free but charges dealers for them. So, if a dealer asks customers to pay for the report, they look at you like a criminal.

CarFax runs TV ads featuring deceitful car salesmen hiding the truth until the little Car Fox character shows up and sets the customer straight. This sets up CarFax as the Consumer Protector battling the Evil Car People.

The company uses dealer data to tell customers what to demand for their trade-in, based on what CarFax says is the value.

So, here we have another vendor setting prices and limiting dealer profits and charging dealers while it rummages through their customer information. We give them data and pay them to take it from us.

But beyond all that, CarFax is creating huge liability risks to both dealers and the auto makers.

“CarFax, lawsuit, settlement.” Enter those words in a Google search to see how many lawsuits have been filed against CarFax, from class actions to individual filings.

I Googled a number of other vendors using the same search words and couldn’t find anywhere near as many lawsuits and complaints. In one case, a court rejected a $500,000 award because the plaintiff attorneys said it was too low. 

Most of the allegations center on inaccuracy of information. I can attest to that. A relative bought a car two years ago, and the dealer showed us the CarFax showing a clean history. Then, recently when he tried to trade it in, another dealer said CarFax indicated the airbags had been deployed in an accident before he purchased the car.

Yes, CarFax does have some sort of disclaimer somewhere on its form saying it’s sort of possible its information might be wrong.

Does that give it a license to insinuate that consumers should rely on its information when buying? Do some consumers then believe a dealer altered the CarFax report and falsified information if it turns out to be wrong? Now we have more animosity.

Dealers tell me horror stories about CarFax experiences with customers. Those range from missing information to erroneous information saying a car had a problem (thus devaluing it) when it didn’t have a problem at all.

I am amazed some auto makers and even some dealer associations have jumped into bed with this firm, either endorsing it or requiring dealers to offer CarFax history reports to consumers.

The first time a consumer sues your dealership over anything involving CarFax, point to the auto maker that required the vehicle history. That auto company  should be a co-defendant.

CarFax has reached out to me several times asking me to meet with them. They know I talk about them in speeches and blogs. I recently had a trusted third party ask me to meet with CarFax.

I told that person there’s no reason for me to meet with these people. I think they are disreputable and they deliberately cause consumers to distrust dealers.

I do not believe their information is complete nor do I believe it’s fully accurate. They indirectly set unrealistic sales prices and interfere with the sales process. There’s little chance they could say anything to change my mind. And I’m not for sale.

If I were you, I would certainly examine my affiliation with CarFax. Then I would make doubly sure the company was not accessing my dealership management system to get information.

Then, I would tell consumers when they asked for the CarFax report that I don’t use it because the results can be erratic and unreliable. If the consumers insist, charge them for the report. It sure isn’t free.

Keep those calls and emails coming.

Jim Ziegler, president of Ziegler Supersystems, is a trainer, commentator and public speaker on dealership issues. He can be reached at zieglerss@aol.com. WardsAuto readers also may comment on this article by logging in or registering below. 

 

Discuss this Blog Entry 11

on Oct 30, 2012

Jim, great article! About 2 years ago, I was hit twice in the same week and both accidents were not my fault. I was so irritated as I know what a dirty CarFax can do to the value of your car and to top it off I was in the process of selling it on my own. Although I turned both accidents into the other parties insurance companies, I opted for the checks and decided to leave the damage in order to show anyone buying the vehicle how minor the accidents really were. I later found out the CARFAX report on my vehicle only showed 1 accident. Apparently not all insurance companies are in bed with CarFax either and brings to light even more inaccuracies listed or not listed on their reports.

on Nov 29, 2012

This website of customer reviews is a hoot. Evidently not everyone is happy with CarFax. What do you think?

http://carfax.pissedconsumer.com/

Little do they realize how many dealers are paying attention to this conversation and the opinions of the participants on this blog and others. CarFax in their supreme arrogance believes this will blow over and go away. I know from experience that they will see this thing explode in coming weeks/months as the message spreads and sinks in. One thing I can promise is that the manufacturers and other vendors who are propping them up will back off of them as the heat turns up from the newly-educated dealers.

There is no amount of PR they can do that will reverse what's coming. Their anti-dealer posture will backfire.

on Oct 30, 2012

I view that CarFax is going to become a much larger issue with dealers. They have recently raised their prices disproportionately and made exclusive deals with lead providers that excludes their competition. here is an interesting link http://www.consumeraffairs.com/automotive/carfax_inacc.html

on Nov 5, 2012

I found it interesting when I traded in 2 vehicles (2003 and 1996) that I had owned since new last year to a dealer. I pulled the CarFax reports that the dealer provided to see how they compared to what I knew about the vehicles. Both were wrong. One failed to show a major accident even though the repairs were done through insurance at a new car dealer for the brand. The other one showed an accident (person ran on foot into street and into side of my car) but that accident had no damage and no repairs were performed. The records of service were spotty at best. I guess that is why in their TV ad they quickly state that you can "see accidents and service reported to CarFax". That way they can blame the sources for not providing the data when a discrepancy comes up.

on Nov 12, 2012

CarFax and all the other reporting companies should be sued for destroying the values of perfectly good vehicles. Yes, you may get the occasional flooded one or a complete rebuild, but for the most part the damages are limited and what matters is HOW it was repaired, not the fact that it WAS. Unfortunately, no detail is available and anything listed on these reports is looked at as "bad" and results in a reduced price. Have we been lulled into believing these reports are priceless and is the answer to everything?

Once I was sitting at a light and got bumped from behind. Nothing more than a tear in the bumper cover. Bingo! Marked Carfax! 2 years later the dealer told me that the trade value was reduced because he would have a hard time selling it. Are you kidding me?

on Nov 16, 2012

CarFax craps on Dealers - Again (this is an opinion piece here)

CarFax in order to keep consumers frightened and wary of dealers has gone far too far this time. They have added a bold disclaimer on CarFax reports on Cars in the Northeast that put a stigma on dealers entire inventory,. This is unconscionable... In a bold print highlighted banner across the top of every Carfax in the states affected by the hurricane... it reads as follows...

"This vehicle has been registered or located in a county declared a major Disaster area by FEMA after hurricane Sandy. This vehicle may not have been affected but please check for possible flood damage during a pre-purchase inspection."

on Nov 16, 2012

A dealer friend of mine writes.... I was passing the CarFax information on to a dealer friend of mine who immediately cut the access to their Service data and intended to cancel CarFax service. Unfortunately, their Rep informed them that the contract they originally signed was a self-renewing 1-year agreement that can only be broken by a written cancellation notice at 30 days prior to the annual renewal. They are stuck with them until next May, but then it's "Good-Bye!"

on Nov 16, 2012

CarFax warnings in areas affected by hurricane Sandy that the car is registered in an area where flood damage occurred. Actually we need to educate consumers that CarFax just substantially lowered the money their trade in is worth. What these kinds of warnings do to dealers is lower the average ACV across an entire region of the country. They cost dealers and the consumers real money, in other words.

on Nov 30, 2012

LOOK LOOK LOOK - Interesting report from CBS News back in 2004 - even CBS is onto Carfax. http://www.autopi.com/carfaxCBS.html

on Aug 26, 2013

I know that this article is 10 months old, but I thought I would outline by experience with the scam that is Carfax.

Last Saturday, I went to purchase a new car and trade in my 2002 BMW 330, which KBB lists around $4K -- because it needs some work (tyres, windscreen repairs etc.) I thought $3.5K was a fair value.

Imagine my surprise when the dealer offered $2K.....wholly based on a Carfax report which listed my car as being in an accident in 2008. The dealer also acknowledged that he would have met my $3.5K price had the Carfax report been clean.

In January 2008, in heavy traffic on the freeway during torrential rain and commute traffic, traveling about 2-4 mph, a box truck pulled across from the lane beside me and rubbed their tyre against my front right side. Initially I was upset that the truck never stopped, so called the police to report an incident. However, after discussing it with the officer, I decided against following up on filing the report.

There was no formal police report, no insurance claim, no work done on my car......yet, Carfax have reported it as if I had a major impact collision.....which is absolutely irresponsible and reckless on their behalf, and pretty much slandering my reputation.

What is really objectionable is their "Correction Process" -- they refuse to connect me with a live person to discuss this. Of course, that is the usual shyster behaviour, to hide behind faceless email addresses.

on Sep 24, 2013

We should not depend on advertisements and sales clerks. We should do some research before buying a card, regarding the brand, quality etc. Thanks for sharing this article with us and keep posting more updates regarding this in your blog.

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Blogs about automotive retailing, commenting on news impacting the business of selling vehicles.

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Steve Finlay

Steve Finlay is the editor of WardsAuto Dealer Business magazine and a senior editor for WardsAuto.com. His journalism career started 42 years ago as a crime reporter. A Michigan native, he likes...

Jim Ziegler

Jim Ziegler, president of Ziegler Supersystems, is a trainer, commentator and public speaker on dealership issues.
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