News 5 Investigates

Jan 30, 2014 8:12 PM by Eric Ross

News 5 Investigates: The hidden truth behind Carfax reports

If you've purchased a used car, you may have asked to see a Carfax report.

While they are supposed to tell you all about the vehicle's history, that's not always the case.

The web-based company claims to be "the most trusted provider of vehicle history information," but consumer Adorea Swartz has a different opinion.

"I just don't trust the whole thing at all," she said.

While walking the lot at a used car dealership, Swartz fell in love with a blue Ford Expedition. From a distance, everything looked fine.

"The Carfax report came back clean," she said.

Swartz says the SUV was anything but clean and appeared to have flood damage.

"The entire undercarriage of the vehicle was rusted and on the inside of the car under the carpet, you could see where salt water had evaporated," she said.

She asked about the damage, but says the dealership told her there were no problems and referred back to the Carfax report which gave the vehicle a "green" approval stamp.

"Carfax is accurate about 60 percent of the time," David Stein with Bob Penkhus Motor Company said.

While Stein says Carfax reports can be a useful tool, it should not be your final deciding factor when buying a car.

"They are just a reporting agency," he said. "They can only report what's given to them."

Many insurance companies and car dealerships have partnered with Carfax, meaning if a car with damage gets repaired using one of those agencies, chances are it will show up on a Carfax report. However, there's a loophole.

"If you take it to a small mom and pop shop, they are not going to report it," Swartz said.

She's right. There are no policies requiring dealerships or auto repair shops to report damage to Carfax. It's voluntary, so unless Carfax receives a claim, the report will pop up clean.

Over the past three years, more than 300 complaints nationwide have been filed with the Better Business Bureau.

Below is a breakdown of complaints:
*327 complaints received in the past 36 months
*Advertising/sales issues: 94
*Billing issues: 11
*Delivery service issues: 5
*Guarantee/Warranty issues: 12
*Problems with product and/or service: 205

142 claims filed with the BBB have been settled over the past 12 months.

In 2013, Carfax was slapped with a $50 million antitrust lawsuit. 500 dealerships across the nation have joined in, claiming Carfax was providing unreliable information to consumers.

"Always get a vehicle inspected by a third-party inspection company," Stein said. "The best thing to do is to buy a vehicle from a reputable dealer and buy from a dealer who will stand behind what they are selling."

As for Adorea, she's lost trust in Carfax.

"That piece of paper is not going to tell me what's on that vehicle," she said. "Take it down to a local mechanic that you trust and have them look over the vehicle."

We contacted Carfax for comment regarding flaws in their reporting.

"Thousands of accidents happen every day that aren't reported to anyone, including Carfax," the company said in a statement sent to News 5. "We're working hard to find that information and make it available."

The company offered no further explanation on how they plan to improve the accuracy of their reports.

The lawsuit against Carfax is currently being heard in federal court. As soon as we get word on a ruling, we'll be sure to pass it along to you.

In addition to pulling a Carfax report, buyers and auto dealers can request a report through AutoCheck.

"Vehicle history reports are important (because they provide a unique view into a vehicle's past), but should be one step in the pre-owned vehicle purchasing process," AutoCheck said in a statement sent to News 5.

The company operates similar to Carfax, but consumer advocates recommend you not base your car purchase solely off these reports.



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