Just a short time after James Reed pulled his SUV into the garage of his Graham home, it caught fire. His wife Renae remembers it vividly.

My son's bedroom was above the garage door and all I can think about was, if we hadn't had seen the smoke, if we had gone to bed early, what could have happened to him? she said.

Their family was safe, butthey needed a new car. A search on Craigslist came up with a 2007 Volvo SUV for $17,000.

We felt like maybe we're being blessed with a good vehicle after what happened, Renae said.

After making contact with the owner and getting the VIN number, the Reeds bought a CARFAX report to check the vehicle's history.

James was confident it would pick up anything that would raise a red flag.

If there were any damages of any kind or if it was in any kind of flood, or whatever, even if it was stolen or any of those things was what I was looking for, he said.

CARFAX says it gets data from 34,000 different sources - checking everything from branded titles, odometer readings to stolen cars.

The Reeds' report on the Volvo came back clean. What the Reeds and CARFAX didn't know was that the SUV was stolen in Portland two days earlier.

Not knowing that vital information, they met the suspect captured in surveillance photos in Tacoma.

Renae says she had no reason to be suspicious.

He was not pushy, clean cut, sweet, young darling college student, she said.

James checked the VIN the suspect gave him against the CARFAX report. The man presented two forms of ID. The Reeds negotiated a lower price and went to a bank and handed over $16,000.

But when James tried to get the car titled the very same day, he got the bad news.

That's when it felt like somebody punched me in the gut, he said.

How could this happen? How could the company not know such critical data?

In a statement, CARFAX says, Not all organizations choose to report information about stolen vehicles to CARFAX.

You would certainly think that if it was stolen that would be huge, that that would be on there. To us that was kind of a no-brainer, said James.

According to the Tacoma Police Department, it was almost as if the thieves already knew the information you are finding out now.

Det. Gretchen Aguirre from the Tacoma Police Department says the thieves were very well organized and the Reeds did all they could to protect themselves.

The Volvo the Reeds paid for was registered in Oregon, but Oregon's DMV does not report stolen cars to CARFAX, according to David House from Oregon's Department of Motor Vehicles.

There really is no system to check the status of the vehicle in real-time, he said.

Idaho doesn't give stolen car information to CARFAX either.

Washington state does send that info to the company, but it's only put out once a week. The Washington State Patrol doesn't share stolen car data either.

It's supposed to be reliable, James said. He and his wife both put a lot of trust in the CARFAX report. I don't know if anywhere on that disclosure saysthat the state of Oregon doesn't report, you know?

As far as the CARFAX Buyback Guarantee, it doesn't mention stolen cars.

I asked CARFAX if the Reeds qualified for it. The company's answer:No.

It's a loophole that leaves this family out $16,0000 and a whole lot of trust.

We were going on the information that CARFAX was giving us, in trusting the information they had was solid, James said. It wasn't.

I spoke with the Attorney General's Office. Their advice: Buy from a licensed dealer or someone you know. Be careful when dealing with someone who wants cash quickly. You can also go with the seller to the title agency.

One more note: AutoCheck's guarantee doesn't include stolen cars either. For much cheaper than a CARFAX or AutoCheck, go to the National Motor Vehicle Title Information System ( It's run by the Department of Justice. On that site you can check a title for around $5.

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