Investigation Into Completeness of CarFax Reports

Serious crash histories sometimes missed by popular service.
3:43 | 09/05/13

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Transcript for Investigation Into Completeness of CarFax Reports
september 17. We turn to a big spike in car sales and something used to make the sale. We asked american families if they can trust what they're being told about the history of the car they're buying. Abc's david muir is here with a major development and real answers. Reporter: Great to be with you. You'll remember our team of producers out to test one of the most popular tools used to sell you and your family a car. Six months later we go back and why we're not the only ones looking for real answers. Perhaps you've seen the ads. 40 bucks an you get the history of the car you're looking to buy. We wanted to know does that car fax report always tell you everything about that used car? Our producers heading out with hidden cameras. At this dealership in new jersey we met reek co and it took minutes before he turned to the car fax. When you click on car fix, no accidents, one owner. Reporter: In fact, the car fax report on both cars shows no accidents, no damage reported to car fax. What the dealership didn't know is that we did our own research. I'm david muir with abc news. Reporter: About to reveal the truth. We have a police report right here which says the mazda was in a major accident. Not only that we contacted the former owner of the mazda who told us he was in that accident and they were the middle car. I don't look under the hood of these cars or anything like that. When that car fax doesn't reveal that that car has been in fact in an accident, a major collision, do you not see something wrong there? You have to take that up with car fax. Reporter: So we did. At car fax headquarters in virginia. When an american family shows up on the car lot and says show me the car fax, are they getting a full and complete report on that car? They'll get the full and complete car fax report on that car. That's not what I'm asking. I'm asking are they getting the full picture on the history of that car? There is no full history on anything. Reporter: Car fax works with POLICE STATIONS, DMVs, BODY Shops but acknowledges they can't work with everyone and in every one of their printed reports they suggested you get an inspection. Take it for a test drive. Does it say that in the ads? It does not. Reporter: Six months later we wanted to know any change in any of those ads? They wouldn't comment. But we noticed this ad before and a nearly identical one now with one different line. Nobody knows everything but a car fax report is a great place to start. Reporter: And we went back to that dealership. In fact, that dealership now suing car fax. More than 400 dealerships joining, too. A $150 million lawsuit. Arguing car fax has monopoly power when it comes to car history reports. When you saw that we revealed the true history of those cars. After we saw your report, car fax had no account ability to their reports. And we wondered about rico. There he was on the lot. He now offers a history report from one of car fax's competitors, too. Along with this. You say take it for a test drive and check with a mechanic. Yes. Just to protect your investment. Still on the job there but offering more than a car fax. Experts say have a mechanic look at the car because those reports that we've all learned now aren't always the complete history. Diane, as you heard in that car fax ad, nobody knows everything. Thank you so much, david muir for saying on the case tonight.

This transcript has been automatically generated and may not be 100% accurate.

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