Since the start of the COVID-19 pandemic, nearly a year ago, life has completely changed. Business owners are dealing with a variety of new challenges due to the new, remote way-of-life. It is important for businesses to adapt their services and products so that customers can still utilize what their business has to offer. When it comes to insurance and warranty companies, the COVID-19 pandemic has made warranty fraud a bigger issue than ever before.

       

Contact Us

               

Warranty Fraud In the US

Warranty fraud is a huge topic problem for insurance and warranty companies. We already know that the US spends over $26 Billion on warranty expenses and at least 10% of that is spent on fraudulent claims. That's $2.61 Billion wasted, and that's only counting the data that is reported. Plenty of fraudulent warranty claims go unreported, so that number could be much higher than we think.

Warranty fraud affects everyone! It directly affects the business that has fallen victim to the perpetrators because money, labor, and other resources will be wasted. This can also lead to customer dissatisfaction because of the inefficient processes and higher fees and restrictions.

What causes automotive warranty fraud? Here are the most common reasons for automotive warranty fraud:

  • Over-Charging For Repairs
  • Conducting Repairs Right Before The End Of The Warranty Period
  • Replacing Parts That Could Be Repaired
  • Double Charging The Manufacturer and Consumer For The Same Repair
  • False Representations Of The Part Quality
  • Substituting Lower-Cost Parts In Order To Maximize Margin
  • Submitting Multiple Invoices For Parts And Work
  • Submitting A False Or Inflated Invoice

Will Warranty Fraud Cases Increase?

The short answer: yes. According to the Association of Certified Fraud Examiners, 79% of businesses say that they have already seen an increase in the overall level of fraud since the beginning of the pandemic. Already, businesses are preparing for this issue to get even more significant as 90% of businesses believe that there will be even more cases in the next year.

While nearly everyone has been impacted by the COVID-19 pandemic, the automotive industry continues to be one of the most affected industries. There are significantly fewer sales and higher costs which results in hardship all around. This could be an underlying reason why automotive warranty fraud is on the rise. Regardless of whether or not you believe you or your business will be affected by the rise in warranty fraud claims, you should be aware of this issue and put processes in place to minimize it.

Is Warranty Fraud Harder To Detect?

Here at Wrench, we can't predict the future, nor can we promise that warranty fraud can be completely eliminated, but with the right processes and protocols, your business can find an effective way to detect warranty fraud and reduce the number of fraudulent claims.

The COVID-19 pandemic has not only increased the number of fraudulent warranty claims but, according to the Association of Certified Fraud Examiners,  77% of businesses believe that fraud prevention and investigation will be more difficult now than it was before the pandemic. Warranty fraud has been a huge problem for businesses for many years.

Here are some of the factors that make warranty fraud more difficult to detect due to the pandemic:

  • Inability To Travel
  • Lack Of Access To Evidence Proving Fraud
  • Challenges In Conducting Remote Interviews
  • Canceled Or Postponed Investigations
  • Changes In Protocols Due To Working Remotely
  • Technology Challenges
  • Decreased Budget For Anti-Fraud Processes
  • Reduction In Anti-Fraud Staff

Warranty fraud isn't that much harder to detect than it was before, your business needs to adapts to the remote-working world and put in a variety of processes that can help you detect warranty fraud during the COVID-19 pandemic.

If you or your business is concerned about automotive warranty fraud, don't worry! There are plenty of things you can do to detect warranty fraud.

How Can Businesses Prevent Warranty Fraud?

Many auto insurers and warranty providers are paying additional fees due to warranty fraud without their knowledge. These businesses often lack the systems and processes that are needed in order to effectively identify cases of warranty fraud.

In fact, warranty fraud can be detected by one simple action. Good Inspections!

Here at Wrench, we have hundreds of qualified inspectors all over the country. With Wrench Inspections, you will get an incredibly detailed, easy-to-understand report that will go over the condition of the vehicle, complete with photo evidence.

With our inspectors, you will be getting the evidence and data you need in order to detect warranty fraud. After that, you will be able to take the appropriate steps to solve the problem. Contact us at 888-231-7965 to learn more about our warranty inspection services.

           

Contact Us