SCM Publisher Martin stoked a lot of interest with his May 2021 “Shifting Gears” column that explained how important CARFAX has become to the collector-car market. We printed excellent letters from Donald Davret and David Preston concerning CARFAX and potential errors in its reports in the July 2021 issue.

Subsequently, Publisher Martin received another letter from John Sise of New York City, which appeared in the August issue. Sise expressed his frustration that the “bad” CARFAX report on his Aston Martin has led to a diminished value on the car, despite the relatively minor nature of the reported accident, which has been appropriately repaired. Sise explained that when he inquired with a dealer about trading in his car, he was given a lowball offer.

All of this interest prompted me to investigate what you can do when CARFAX gets it wrong.

Note: We’re dealing with CARFAX here because it is the most recognized company. But there are others in the market, and the discussion is at least partly applicable to them.

Let them know

If you go to the CARFAX website and click on “Help,” the bottom of the screen has a link to where you can report errors. That takes you to an input form where you are asked to identify yourself and your car, explain the error, attach documents that verify the error, and submit. They promise to get back to you as quickly as possible.

My first reaction was that this seems a lot like dealing with the IRS, so I searched everywhere I could to find a phone number for a human being to speak to at CARFAX. I couldn’t.

Find a friend in a high place

Off-website sleuthing got me to an email address for Julie Ortmeier, Vice President, General Counsel & Secretary of CARFAX. Ortmeier promptly and cheerfully responded to my email with a call to talk about how to fix errors.

Ortmeier was quick to point out that they do a huge volume of reports, and they almost always get them right. Errors are unavoidable, and they want them corrected as much as we do, because the value of their service depends upon its accuracy and the depth of its information content.

Ortmeier stated that, because of the volume, “it isn’t feasible to staff telephone operators to take calls 24 hours a day.” But she advised, “Don’t hesitate to submit the online data research request form. We usually get back to you within a few days.” She also pointed out that they do a fair amount of work to confirm data.

But the most important point, according to Ortmeier, is that “the owner really needs to submit the best possible documentation of the error. Just telling CARFAX something is wrong, without documentation, is not helpful.”

To understand that, you have to understand what CARFAX does and how it gets its information. Ortmeier explained that CARFAX gets its information from more than 114,000 sources — DMVs, insurance companies, dealers, shops and others. CARFAX does not generally pay for this information. It is provided by sources who see the value of the CARFAX database and reports, and are willing to help.

CARFAX simply takes all of this data and then includes everything in its form that has been reported. “CARFAX works with its sources to verify accuracy of the data when needed, but because CARFAX is not in possession of the vehicles, it cannot inspect the vehicles,” Ortmeier said.

She stressed that every CARFAX report explains these limitations clearly. Here are some sample explanations:

This CARFAX Vehicle History Report is based only on information supplied to CARFAX and available as of [the date and time the report was run]. Other information about this vehicle, including problems, may not have been reported to CARFAX. Use this report as one important tool, along with a vehicle inspection and test drive, to make a better decision about your next used car.

Not all accidents/issues are reported to CARFAX. 

Misuse by the public

That is all well and good, but the fact is, many users of CARFAX reports (and those of its competitors, as well) don’t pay close attention. Several dealers have told “Legal Files” that they don’t even want to consign a car that does not have a “clean” CARFAX. The dealer Sise spoke to about his Aston seems to recognize that unfortunate truth. Is it fair to blame CARFAX for that?

Ortmeier quickly and somewhat predictably answered no.

Even if some people overreact, the information exists, the damage happened, and it is still important that the information be made available. “We want to help buyers and sellers to be on a level playing field. Before CARFAX started reporting this information, consumers were at a disadvantage compared to dealers, as the dealers had ample opportunity to inspect a car and find defects. A seller may not want damage information disclosed, but that’s misrepresenting the car being sold. We all benefit from transparency.”

That is a huge point. Whatever happened to the car happened. It can’t be erased. The car is whatever it is, and buyers are entitled to know.

Should you sue?

When you do run into a true error in your car’s report, it’s not clear that litigation is your best strategy. CARFAX and the other automobile-condition reporting companies are not subject to any specific governmental regulation as, for example, credit reporting agencies are. Without a statutory and regulatory framework, you have to fall back on general legal principles and rights.

Most all judges and juries are going to think that these companies are serving a useful function. Remember, used-car salesmen are among the least-respected people in the country. Given the way CARFAX gets its information, its disclosures and the process for rectifying errors, it’s going to be hard to establish that it has some sort of legal obligation to verify the accuracy of all information before reporting it.

These companies certainly don’t try to damage any particular seller, so you probably end up with a negligence standard — that is, did they reasonably rely on the information provided to them?

The real culprit is the source. If one of their reporting sources got it wrong, your most direct approach might be to try to force the source to correct the error. If CARFAX (or any of its competitors) refuses to divulge its sources, that’s another matter. I know of no basis in the law that would make the identity of a source legally confidential, and if you can’t get it, your lawyer should be able to get that information.

Seller strategy

If you are going to be selling your car, get a CARFAX report first so you see what the potential buyers are going to see. If you see errors, make the request to correct them. Allow plenty of time for the correction. Ortmeier advises that the time needed to correct an error “depends on the inquiry.” For some data, CARFAX has to go to a DMV or other government agencies, and CARFAX cannot control how long it will take for a government agency to respond.

“It also helps if you provide CARFAX with the best documentation you have. If the issue is over a damage record, submit a police report or a repair estimate or invoice that will show the actual extent of the damage,” she said. With other problems, get as creative as you can. Just pounding the table and insisting the report is wrong doesn’t give them much to work with.

If you can’t solve it directly with CARFAX, you may have to push the reporting source to correct the error. CARFAX believed what it reported to begin with. If the source corrects or “updates” its report, CARFAX will readily believe that as well.

If all else fails, you will have to either discount the car or find someone who will overlook the damage. Sise did that when he purchased the Aston, aware from its CARFAX that the car had minor damage. He did his homework to satisfy himself that the car was “in pristine shape with no hint of damage.” You’ll just have to work harder to find someone else like him ♦

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