The “Car Fax Effect”

It has become a ritual of buying a used car, an icon of authority. You go to the dealers, scan ads in the paper, and pore over web sites to check out what’s available. After hours or days of searching, you find that special new-to-you vehicle that you want. You kick the tires, drive the beast around, and then comes the time to negotiate for the best possible deal.

“Has your car ever been in an accident?” You gotta ask. There were a couple glitches in the paint that were nagging at you, but overall the car looked great.

The dealer reaches into his drawer and pulls out his trump card. “I have a Car Fax report on that vehicle.” You study the sheet. The Car Fax report is clean: there are no accidents reported on the report.

What does this mean?

If you read the fine print, it means that nothing was found in the standard sources of information routinely collected by Car Fax, such as police reports and insurance databases. Can you breathe a sigh of relief and know the car has never been in an accident?


A clean Car Fax report means that no accident report was found in the records compiled by Car Fax. It does not mean that the car has never been in an accident. So, for example, if the car was involved in a serious accident and the owner paid out-of-pocket for the repairs to avoid using insurance, no report would have been filed. If the car was totaled and rebuilt by a private dealer who paid for it, there would be no record. So a car dealer who purchased a car and made repairs at its own body shop might be able to produce a clean Car Fax report. And, if you’re like the last car dealer from whom I purchased a car, you will likely have to sign a form that states that no representation was made by the dealer about the condition or history of the car, and asking you to waive all liability for any problems found.

Caveat emptor, buyer beware, still prevails. Accidents listed on a Car Fax report are likely to be accurate. But the buyer has no way of knowing if they are the only accidents, or if none are listed, if there have been any accidents at all.

In my last posting I talked about “zero, naught, and nothing.” This is really part two of that presentation. A Car Fax report allows the reader to assume that the database used has a complete and accurate record of everything that has ever happened to the car. Just because the report is blank (“naught” or empty) does not mean that the car has had “zero” accidents. It is an expensive mistake, however, to assume that naught is the same as zero.

As we will see in a later posting, this is a more common error than we might imagine. The assumptions we make in our research compound the problem further, in that we sometimes reach conclusions that reach beyond the evidence.

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