Be Vigilant When Purchasing Vehicle History Reports and Extended Warranties
A vehicle history report is a good tool for finding out a lot about a car’s past, but the Federal Trade Commission is warning consumers about scam artists posing as legitimate providers of this service.
The Better Business Bureau is also warning buyers about the limitations of vehicle service contracts.
In both cases, make sure you diligently research the services before signing up for a costly contract or hand over personal information.
It’s a common question when you’re selling a car: “Do you have a vehicle history report?” It’s a smart thing to ask, because at their best these reports will show not only if the prospective purchase was in an accident, but also its service record.
The buyer might think that a clean report from Carfax, AutoCheck, Bumper, or one of the other major suppliers assures peace of mind, but in fact accidents can and do get missed. If an accident isn’t reported to an insurance company, law enforcement or other authorities, it can get by the radar. In the case of minor fender benders, owners might want to keep the incident to themselves for fear of higher rates. And not all body shops share their data.
Centreville, Virginia-based Carfax, which charges around $40 for its reports, admits the problem. “Carfax receives data from 115,000 sources, with a total of 27 billion records,” Emilie Voss, public relations director, told Autoweek. “We load 5.5 million records every day. We have the most accident and damage information of anybody, but we don’t have everything on every vehicle. Sometimes an accident is not covered by one of our sources, which is why we’re constantly updating the records.”
Voss said the company recommends that would-be buyers take test drives and get pre-purchase inspections—either their own or via a third party—to go along with their Carfax. But vehicle history reports are becoming more central to the purchase with the rise of online classic car sites such as Bring a Trailer, where out-of-state purchases are common.
There are scam artists out there, however. Sometimes a would-be buyer seems ready to put down money, but wants a history report first—a specific one. A link is provided, and it leads to a legitimate-looking vehicle history site—often with a URL ending in “.vin.” Makes sense, right, because the 17-digit vehicle identification number (VIN) is essential to checking a car’s history. In fact, “.vin” is intended for people in the wine industry, though anyone can purchase a domain name.
After paying $20 to $25 for the report and providing some requested information, the seller gets the document and emails it to the buyer. But from there the trail goes cold—the hot prospect maintains radio silence. What’s in it for this fake “buyer”? Sometimes it’s a referral fee, which can add up to real money if the scam artist is methodical enough. “If you are selling a car online and someone asks you to get a car history report from a specific site, ask why and think twice,” reports the Federal Trade Commission.
The Better Business Bureau (BBB) says that scammers might be after more than just your money. “If the site captures personal information, such as an address, driver’s license number, and/or credit card information, buying these reports opens up victims to the risk of ID theft,” the bureau said.
One site, Myautohistoryreport.com, no longer operational, got a 100 percent negative rating from Trustpilot, with one comment stating, “It’s used for Craigslist scams.”
Consumers do have the alternative of using the free site VehicleHistory.com, or getting a cost-free VIN check from the National Insurance Crime Bureau. From the NICB, up to five free checks daily are allowed from one IP address—useful to know if the car in question ever had a salvage title. The paid sites generally give more information, though. “We give you not just the accidents and damage, but also the service records to show that the car was well-maintained,” Carfax’s Voss said.
Keith Barry, an autos reporter at Consumer Reports, told Autoweek that vehicle history reports from reliable providers such as Carfax are “a good starting point, and can help buyers weed out the bad from the good. Just make sure you choose a reputable company.”
Vehicle Service Contracts
Getting ripped off by history report scams is no fun, but the BBB is also talking about vehicle service contract (VSC) operations. “Consumers get calls or direct mail, and they see ads—some of which use celebrity endorsements,” Chris Thetford, BBB vice president of communications, told Autoweek. “Consumers need to understand that they have to look at the actual contract, not rely on oral representation. There are likely to be conditions and exclusions.”
Many of the service contract companies are in Missouri, and complaints about their operations to the local BBB office nearly tripled between 2018 and 2020, Thetford said. The company with the most complaints in the period (1617) was St. Peters, Missouri-based CarShield (with rapper/actor Ice-T as a continuing spokesman), followed by AutoAssure (533 complaints), and US Automotive Protection Services (207).
In 2020 CarShield filed a lawsuit in Missouri state court against the BBB of Greater St. Louis over the “F” rating it was awarded, claiming that the office has disregarded its own ratings system to arrive at the bad grade. A motion to dismiss that suit was denied in January of last year. According to MarketWatch, which rated CarShield in fourth place, “CarShield’s low BBB score reflects past customers’ difficulties with canceling policies and claims denials. Claims denials are a common complaint in the warranty industry.”
Michael Carter, CarShield general counsel, told Autoweekthat between March 2020 and October of 2021, the company paid out $163 million in claims. He said the complaints cited by BBB are attached to “less than two tenths of a percent of claims.” He added that BBB has an “inherent bias” against CarShield, and that other companies with far more complaints have gotten “A” ratings from the organization.
CarShield got a four-star rating from Trustpilot, with 66 percent of respondents rating the service “excellent.”
Thetford “vigorously denied” the accusation of a BBB bias against CarShield. He said BBB’s grading system takes into account the size of the company, “so the larger it is, the more negative consumer interactions it can have.” He said consumers should consider putting their money into a repair fund, rather than into the $100-a-month payments that these services typically charge. Carter counters that such a fund might be a good idea, but that people just don’t get around to setting one up.
According to CR’s Barry, “The chances are that if you buy an extended warranty you will never use it. The best thing you can do is buy a reliable car.” A 2014 Consumer Reports survey found that 55 percent of owners who purchased an extended warranty hadn’t used it for repairs during the lifetime of the policy, even though the median price paid for the coverage was just over $1200.
Kevin Nehez, shop manager at Maier’s Garage in Bridgeport, Connecticut, told Autoweek that service contract companies “make it really hard to get paid. I spent three hours on the phone with one of those companies over an engine rebuild—it’s almost like we have to charge labor for that. Our policy now is to avoid dealing with them, unless it’s a very long-term customer.”
Carter said that CarShield works closely with a separate Colorado-based entity called American Auto Shield that actually adjudicates individual cases, and what will be covered and what will not be. Carter compares the transaction to a health insurer working with an over-zealous doctor or hospital that wants to provide an MRI, ultrasound and CAT scan. “The adjuster comes out and puts a bridle on some of the mechanics that might be looking for a bigger bill,” he said. “Somebody has to be the parent in the room.”
The bottom line is that consumers buying an extended warranty can’t simply believe TV pitches or a salesman’s claims, but need to read any contract carefully. And think twice about buying a specific history report just because a would-be buyer asks for one.
There’s a lot of unscrupulous actors out there. The stories about being strong-armed into checking the boxes for undercoating and Scotchguard upholstery protection go back a long way. CR’s Barry described a new twist, unique to a seller’s market, in which dealerships offer to sell desirable vehicles at MSRP only if the buyer uses the in-house financing with an above-market rate. A clause in the contract prohibits refinancing for a certain period of time.
Share your experiences with vehicle history reports or vehicle service contracts in the comments below.