CarFax Gets Its Facts Wrong

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 [email protected]. WardsAuto readers also may comment on this article by logging in or registering below.