A clean, clear title.
That's what Lee W. of San Bernardino, California thought his 1998 Corvette had when he bought the sports car two years ago. It's also why he paid $18,000 for the vehicle.
Lee says he felt confident spending the money because the Internet company CARFAX checked the Corvette's title and history.
"The CARFAX report stated the car's title was clear and clean and had never been in an accident," Lee says, adding he paid CARFAX about $20 for the vehicle history report, which checks for salvage titles, flood damage, odometer rollbacks and other problems. "My report said this was a nice, clean car."
When Lee registered the Corvette, though, he discovered the CARFAX report was wrong. His Corvette was a "stolen recovery" vehicle with a branded title.
"The car was stolen in Virginia," Lee says, adding a state inspector uncovered the theft when he ran the Corvette's vehicle identification number (VIN) in the National Insurance Crime Bureau database. "I told the inspector I ran a CARFAX when I bought the Corvette, and he said this information should have been flagged on that report.
"The car now has a branded 'restored/salvage' title, which depreciates its value by $3,000-$5,000."
Lee sold the Corvette last month, and disclosed this information to the new buyer.
"The price was going to be around $20,000, but I had to sell it for about $5,000, he says. "CARFAX cost me thousands of dollars."
CARFAX Cost Seller Thousands
Michael W. of Atlanta, Georgia, says CARFAX also cost him thousands of dollars too. He didn't get ripped off buying a car, though.
He says he lost $5,000 when he traded-in his 2003 Jeep Cherokee.
"The dealership pulled a CARFAX report, and it showed that my Jeep had been severely damaged in an accident, had to be towed, and was unsafe and a possible salvage according to their definitions," Michael says. "None of that was true. My vehicle was involved in an accident, but it was not totaled and I had no trouble driving it to the body shop."
Michael says he immediately contacted CARFAX about the inaccurate information.
"I sent them a 32-33 page report with the body shop records, pictures, names and numbers of the technicians who worked on my car, and the name of my insurance adjustor. But CARFAX refused to change the report to correctly reflect that information.
"CARFAX is a rip-off," Michael says, adding the dealership gave him thousands of dollars less then he wanted for his Jeep because of the CARFAX report. "The company is out there saying 'buy our report and protect yourself when you buy a used car.' They claim to give out accurate information, but they don't. They're giving out erroneous information. They're spitting our garbage and it is costing people millions of dollars."
Similar CARFAX Complaints
A ConsumerAffairs.com investigation reveals that complaints like these about CARFAX are not uncommon.
We've received scores of complaints from used car buyers and sellers nationwide who say CARFAX duped them when they bought or sold a used vehicle.
The complaints are two-fold:
• Car buyers: They ran CARFAX reports when they bought used vehicles, which showed the vehicles had clear titles. But they later discovered the vehicles were previously wrecked, stolen, had rolled back odometers, or some other undisclosed problem.
• Car Sellers: They discovered CARFAX had inaccurate information about their vehicles and the company refused to correct the erroneous data. That inaccurate information, they say, cost them thousands of dollars when they sold their vehicles.
The Most Trusted Source?
CARFAX claims it's the "most trusted provider of vehicle history information." The Virginia-based company also brags that its database has more than four billion records -- from 8,000 public and private sources.
But we learned CARFAX does not receive any records from perhaps the biggest source of information about wrecked vehicles: insurance companies. CARFAX, however, still touts that its records are "relied on by millions of consumers each year."
Should consumers rely on those records?
Can they trust CARFAX to protect them from buying a previously wrecked, totaled, or flooded vehicle? Or a vehicle with a rolled back odometer?
Consumers, car experts and attorneys we interviewed say the company's claims are false and misleading. They also say CARFAX reports are riddled with errors and don't provide the trustworthy information promised.
Even the fine print on the bottom of a CARFAX report admits the company's records aren't 100 percent reliable. That disclaimer states "CARFAX DEPENDS ON ITS SOURCES FOR THE ACCURACY AND RELIABILITY OF ITS INFORMATION.NO RESPONSIBILITY IS ASSUMED BY CARFAX OR ITS AGENTS FOR ERRORS OR OMISSIONS IN THIS REPORT."
"It's a useless service that provides no value to anyone purchasing a vehicle." That's how Mike H. of Sound Beach, New York, describes his experience with CARFAX.
Mike relied on a CARFAX report when he paid nearly $30,000 for a 1999 Corvette.
"I paid $25 for a CARFAX report, which stated the Corvette had never been in an accident," he says. "And I purchased the car based on the information provided to me by CARFAX. That was absolutely a key decision when I was buying this car."
But Mike later discovered his Corvette sustained rear-end damage in a previous accident.
"I had some cosmetic repairs done on the car, and in the process the body shop removed the rear bumper," he says. "There's supposed to be foam that goes behind the rear bumper that's about 6-10 inches thick. When the body shop guys removed the rear bumper, they found that only one-third of that foam was there. So my Corvette was in a rear end collision."
Mike says that undisclosed damage cost him $5,000 when he sold the car.
"I tried to sell it for $26,000, but no one came to me with any serious offers because the car had been previously wrecked," he says, adding he told prospective buyers about the damage. "I sold the car for $21,000."
Mike says he learned an expensive lesson from this experience: "Trust your car mechanic and not CARFAX."
Pam R., of Rockville, Indiana, says she'll never trust a CARFAX report again.
The CARFAX report on the 2001 Chevy Cavalier she bought her 16-year-old son didn't disclose the odometer had been rolled back.
"When we bought the car on May 12, 2005, the CARFAX report said its actual mileage was 61,547," Pam says, confirming that's what the odometer read at the time of sale.
Ten months later, Pam received a recall notice about the ignition switch in her son's car. And that's when she discovered the odometer fraud.
"We took the car to a local Chevy garage and the mechanic said 'did you know the mileage doesn't match what's on your car.' I asked him how that could be and he said someone rolled back the odometer (before we bought the car.)"
Pam asked the garage to pull all the car's maintenance reports.
"Those records showed the car's mileage on May, 14, 2004 was 63,000 when it went in for roadside service," she says. "How could it have 63,000 miles a year before we bought the car? Somebody, somewhere, rolled back the odometer because the mileage was 61,547 when we bought it in May of 2005."
Pam contacted the dealership and CARFAX, but says they refused to help.
"The dealership told me they wouldn't roll back the odometer and said I had to contact CARFAX. But all CARFAX gave me was the run around. No one there would get back to me.
"I think I was lied to when I bought this car," Pam says, adding she still owns the Cavalier. "I'll never pull a CARFAX report again. I thought odometer fraud was a crime. Why didn't it show up on my report?"
Michael C. of Glen Cove, New York, wants to know why -- and how -- false information about his 2000 BMW 328Ci showed up on a CARFAX report.
That inaccurate information, he says, made it difficult to sell his car.
"CARFAX stated that my car had three different mileages and each one was less then the previous one," he says, adding he's the original owner and has all the maintenance records. "The CARFAX report also claimed the car had a possible mileage tampering problem. I now have prospective buyers stating that I messed with the odometer."
Michael says he lost thousands of dollars when he sold his BMW because of the erroneous CARFAX report.
"I was finally able to sell the car, but at a much lower price -- $4,000 less -- than what I was asking," he says, adding CARFAX refused to correct the false mileage information about the BMW. "I came across similar complaints regarding CARFAX and how the reports contain many errors. This has cost many people the potential sales of their cars."
Previous Accident Damage
That's what happened to Susan S. of Bloomfield Hills, Michigan.
She says it took her months to sell her 2001 Dodge Dakota -- and many potential buyers backed out -- because CARFAX erroneously showed her truck was in a serious accident and might be a rebuilt wreck.
"The truck is in mint condition, it's been scrupulously maintained, and has never been in an accident of any kind," Susan says, adding she's the original owner. "I have a dealer inspection to prove the truck has never been in an accident. I also have records from the local township, county, and state police department, and the state of Michigan.
"We sent all these records to CARFAX, but we couldn't get them to remove the false information," she adds. "They maintain their information is accurate, but they refuse to divulge the specific source of that information so I can correct the erroneous record."
Susan says she finally sold the truck, but for thousands less than the asking price.
"It brought in $3,000 less because of the inaccurate CARFAX report," she says. "And that doesn't include the hundreds of dollars we spent on newspaper ads trying to sell the truck or the amount of time we spent gathering records and going back and forth with CARFAX."
Susan sums up her experience with CARFAX in one word: miserable.
Consumers we interviewed also say CARFAX refused to honor its much touted buyback guarantee.
That guarantee promises to reduce the risks of buying a used car -- and protect consumers from "unknowingly buying a used car with DMV-reported incidents (salvage, fire, flood damage, odometer problems or lemon history)."
But we discovered it's not much of a guarantee at all.
On its Web site, CARFAX says it "may buy the vehicle back for the full purchase price" if consumers discover a specific type of DMV-reported incident with their car that was not listed on the original report.
But the guarantee has several restrictions and it doesn't cover all branded titles.
Many consumers say it's just a hoax.
Remember Lee W., who discovered his Corvette had a branded title -- one that didn't show up on his original CARFAX report?
"I filed a claim with CARFAX stating that I wanted to take them up on their guarantee, but they said I didn't qualify. And they wouldn't give me a reason why."
"CARFAX falsely represents what it does," Lee adds. "They're not honest and they don't honor what they say they'll do. They claim to provide a vehicle's history, but when their records aren't accurate, they won't honor their guarantee. I feel this is fraud."
So does Pam R., whose CARFAX report didn't reveal the odometer had been rolled back on her son's Cavalier.
"When I tried to get CARFAX to honor its buyback guarantee, no one there would get back to me," she says. "CARFAX wouldn't even acknowledge my claim."
Nationally recognized consumer attorney Bernard Brown, who specializes in car fraud cases, says CARFAX's guarantee is "utterly worthless except to mislead the public."
The Kansas City attorney warns consumers to read the guarantee's terms and conditions and pay special attention to everything that CARFAX excludes.
The guarantee, for example, does not cover salvage titles that are issued because of theft.
That's what happened with the Corvette Lee W. purchased, and may be the reason CARFAX didn't honor his claim.
"How many times has CARFAX paid out on its guarantee," Brown asks. "Why did it pay those claims? And how does that number compare to the number of CARFAX reports sold?"
A "Smattering" Of Records
Brown's criticism of CARFAX goes far beyond the company's buyback guarantee.
His biggest gripe -- from a consumer protection standpoint -- is the vehicle history information CARFAX provides. Or, in many cases, fails to provide.
"Consumers shouldn't even think about relying on CARFAX to tell them if their used car has been wrecked or the odometer has been rolled back," he says. "If they think those reports are likely to tell them if their car has a problem, they're wrong.
"From our extensive experience, I'd say that 9 out of 10 times, if a car dealer is offering a car for sale -- and that vehicle has been wrecked -- that wreck won't show up on a CARFAX report."
Brown says CARFAX only has "a smattering" of vehicle history information -- not the extensive records it claims.
And it's missing what he considers the biggest pool of records about previously wrecked vehicles -- insurance company claims.
"If you wreck your car and your insurance company pays $10,000 to fix the vehicle, your insurance company won't report this to CARFAX," Brown says. "So how would CARFAX know that your car has been involved in an accident? It won't and this information won't show up on a CARFAX report."
Brown also says information about salvage titles doesn't automatically -- or instantly -- appear on CARFAX reports.
"There are delays between the time a state issues a salvage title and when that information is reported to CARFAX," he says. "Eventually the company may get that information, but it may be a year."
He adds: "The fundamental issue is that you have a business that says 'we have all the information in world' when it only has a tiny fraction of the information that's available. This is a great misleading of the America public."
"A Greater Harm"
The president of a nationally recognized used car inspection company is even more critical of CARFAX.
"I think CARFAX represents a greater harm to used car buyers than all the odometer fraud and flood-damaged vehicles out there," says John Adams, president of Auto P.I. Used Car Inspections in Austin, Texas.
"Carfax spends millions of dollars getting people to buy their reports on the assumption that they have great information ... that they're all things to all people. CARFAX even offers a money back guarantee. If I'm a consumer, I'm thinking this the greatest thing since sliced bread.
"But the dealerships know this is not true. They know CARFAX does not have any type of accident information ... but they make sure every car on their lot has a CARFAX report in the window."
Adams says consumers shouldn't waste their money on a CARFAX report --especially if they want to find out if a used car has previous accident damage.
"I would say 99 percent of CARFAX reports are in error," he says. "Those reports don't have any accident information."
To illustrate his point, Adams recalls an inspection he did on a Ford Mustang.
"We discovered the front of the car had a different VIN number than the back of the car," he says, adding those identification numbers are located on different parts of a vehicle. "In other words, the front part of the car was from one Mustang and the back part of the car was from another Mustang."
The Mustang's owner ran the two VINs through CARFAX. And both came to back to cars with clean titles.
"Neither CARFAX report showed the cars had been in an accident," Adams says. "The CARFAX report said each of those VINs went to cars with clean, clear titles."
"An Indispensable Tool"
A spokesman for CARFAX defends his company's reports saying they're "an indispensable tool for consumers to use."
But Chris Basso, media relations manager, says his company never advises consumers to rely solely on a CARFAX report when buying a used vehicle.
"We never tell consumers that CARFAX reports are the end all, be all," he says. "Our reports are a valuable tool, but that's one of a three-step process. We advise consumers to get a CARFAX report, take a test drive, and have the vehicle checked out by an independent mechanic. These steps provide the best protection for consumers.
"We never say that CARFAX has all the information out there about a vehicle's history."
Basso, however, says his company has more than four billion records from 8,0000 sources, including all 50 state departments of motor vehicle and the District of Columbia; the Canadian Motor Vehicle department, auto auctions, repair shops, rental agencies, and some police and fire departments.
"We receive two to three million records a day on average," he says. "And we're constantly looking for new sources of information to piece together vehicle history information. The number one thing for consumers is the DMV information. Consumers can rest assured that they (the DMV's) will know if a there's a salvage or junk tile that's been reported on a car."
Basso acknowledges his company doesn't receive insurance company records, but downplays that gap in its database.
"There are incidents that happen everyday that aren't reported to anyone," he says.
Basso says he "absolutely disagrees" with anyone who says his company's records are not accurate. And he emphasizes his company's buyback guarantee protects consumers who pull a CARFAX report with inaccurate information.
How many times has CARFAX honored that guarantee?
"Since we introduced the program more than two years ago, we've bought back nine vehicles," Basso says, adding the company pays up to 110 percent of the vehicle's Kelley Blue Book value.
Basso also claims his company doesn't ignore consumers who say CARFAX has inaccurate information about their vehicles.
"Those consumers can contact us through our Web site (www.carfax.com)," Basso says.
CARFAX only responds to customer service questions through e-mail and its employee are supposed to answer consumers within eight hours. "If we identify a record that needs to be corrected, we'll correct it. Sometimes it's human error ... a digit off on the mileage. We'll research the issue and we verify with our sources."
Basso also says his company encourages dealerships to pull CARFAX reports for their customers.
"This builds trust and confidence with buyers," he says. "We're here to provide information to dealers and consumers so they can make good decisions when buying a used car. We're an independent third party, but we're also a consumer advocate."
"The Biggest Purveyor Of Unverified Automotive Information"
Consumers who contacted us say CARFAX isn't an advocate they want on their side.
"One can't believe anything on these CARFAX reports," says Sandra M., of Sarasota, Florida.
Paul B., of East Meadow, New York, calls CARFAX "the biggest purveyor of unverified and unknown sources of automotive information on the planet."
Kansas City attorney Bernard Brown says CARFAX has mastered the art of selling half-truths.
"CARFAX gets consumers to pay $20 for a report that's supposed to prevent them from being cheated. But they've already been cheated (because the information will likely be inaccurate). And based on that inaccurate information, CARFAX convinces consumers to spend more money -- in some cases thousands of dollars -- on a car that may have serious problems."
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