Carfax has been around for several years now, and, given the advertising, many consumers think that it presents an accurate vehicle history when buying a used car.

Well, sometimes.

Carfax will gather information from participating states’ Department of Motor Vehicles and participating dealerships and repair facilities.  Note the word “participating”.  If a body shop or a dealership does not report some vehicle history items to Carfax, then these items will never make it onto a Carfax report.

More important, Carfax does not have access to insurance claims records, which is where the goldmine really is.  When someone wrecks their car and files an insurance claim to fix it, this claim information will go to LexisNexis (used to be Choicepoint, before LexisNexis bought Choicepoint from Equifax), which maintains the information in a proprietary database.  You cannot just call up LexisNexis and get a copy of the report unless you are an owner of the car.  So, effectively, you do not have easy access to what probably is the most valuable source of information about vehicle history.

Also, Carfax suffers from “reporting lag,” where information which should belong on a Carfax report does not wind up on the Carfax report for up to six months.  This one is baffling, because Carfax has the ability to gather and report the information it does have pretty much immediately.

Dealerships know about these flaws in Carfax, and use them to trick consumers.  Dealers, when retailing a car with known collision damage, can pull a Carfax and find out if the Carfax is “clean”.  The car may have damage and the damage may be easily observed by any competent inspection of the vehicle, but if the car has a clean Carfax report, you can bet that many dealers are going to try to retail the car.  The alternative for a collision-damaged car is a wholesale auction, and the dealers do not make any money when they have to auction a car.  On the other hand, dealers make their best money retailing used cars to consumers.  There is definite incentive to cheat.

So, if you are buying a car and you get a “clean Carfax” from the dealer, insist that the dealer also provide you with its inspection report, to see if the dealer’s technician has noted any collision damage.  Or, before you buy (particularly if you’re spending a lot of money on the car), insist on having your own mechanic inspect it.

And, if you’ve been cheated with a collision-damaged car or a prior lemon with a “clean Carfax,” then call our firm.

Thank you for reading.

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