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Thursday, February 29, 2024
Courthouse News Service
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Competitor Says Carfax Stole Its Subaru Contract

CHICAGO (CN) - Carfax made disparaging and false statements about another company that offers vehicle-history reports to torpedo a $2.3 million deal with Subaru, the competitor claims in a federal complaint.

As with Carfax, consumers and dealers interested in buying a used car can buy a vehicle history report (VHR) from Illinois-based Experian Information Solutions under the trademark AutoCheck.

Experian says Carfax has contracted with Subaru for years under the dealer's Certified Pre-Owned (CPO) program.

Since that deal will be up for renewal in February 2012, Subaru began to shop around and ultimately offered the contract to Experian, according to the complaint.

Subaru was firmly committed to switching to AutoCheck, such that, on Oct. 19, "Subaru requested Experian's logo to incorporate into Subaru's marketing material," Experian claims.

Two days later, however, "CARFAX sent Subaru a letter clearly intended to dissuade Subaru from executing a CPO-VHR Contract with Experian," according to the complaint.

"This October 21, 2011 letter contained numerous false, misleading, and derogatory statements about Experian and its AutoCheck product," Experian claims.

The letter allegedly stated that "the VHR data used by Carfax is 'vastly superior' and that using 'AutoCheck will allow a significant number of problem vehicles into [Subaru's] program.'"

It also allegedly claimed that "Carfax knows that a significant number of consumers, when faced with an unfamiliar brand of VHR will abandon the listing and come to Carfax.com to run the Carfax report."

Three days after Carfax sent this letter, "Subaru informed Experian that it was putting the brakes on its switch to Experian," according to the complaint. "Instead, Subaru said it now wanted to survey its dealers (at the suggestion of Carfax) before switching to Experian." (Parenthese in original.)

Subaru allegedly said its survey convinced it to renew with CARFAX rather than switch to AutoCheck, a decision that allegedly cost Experian over $2.3 million in lost revenues.

But Experian says "the survey questions were crafted in a manner designed to elicit biases responses from Subaru's dealers in favor of Carfax."

Experian demands punitive damages, alleging defamation, libel and interference with prospective economic advantage. It is represented by James Barton of Michael, Best & Friedrich in Milwaukee, Wis.

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