Many business owners avoid talking about automotive warranty fraud because, let's face it, nobody wants to admit that they are losing millions. Since automotive warranty fraud is something that gets swept under the rug, many have a hard time finding the best solution for their business. While preventing fraud may feel like an overwhelming task to tackle, it doesn't have to be that way forever. The first step in automotive warranty fraud prevention is detection. Once you have the proper processes in place, such as hiring ASE-certified inspectors, you will save your business millions.


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"I know warranty fraud is a big problem in the automotive industry, but it isn't a big problem for us."

Does that statement sound familiar? Warranty companies all over the country have been affected by warranty fraud, but nobody really knows the scale of damage it causes. Since fraudulent warranty claims are hard to detect, it makes it nearly impossible to know how much money companies are losing. However, with the right automotive warranty fraud detection processes, companies can detect and fight back against fraud.

What Is Automotive Warranty Fraud?

Automotive warranty fraud is nothing new. People have been trying to cut corners and cheat others for a few extra dollars for decades. Once Henry Ford perfected the vehicle assembly line, part quality became consistent which led to the addition of automotive warranties. Back in 1925, Ford began offering a warranty on his vehicles, a 90-day guarantee on parts and a 30-day guarantee on labor. Eventually, warrantees changed and companies arose that specifically took care of these guarantees.

It is important for automotive warranty companies to get a good understanding of warranty fraud and how it happens so they can put processes and protocols in place to detect fraud. Without the right processes, automotive warranty companies could be losing up to 5% of their yearly revenue. Depending on the size and scale of your company, you could be losing millions or billions of dollars every year!

Reasons For Automotive Warranty Fraud

There are many ways that automotive warranty fraud can occur which can cause businesses to fail to detect the fraud if they are only looking for one specific type. That's why it is important to know all of the ways your company could fall victim to automotive warranty fraud. By educating your employees on what to look out for, your company could be better equipped to detect automotive warranty fraud.

Here are 8 common reasons for automotive warranty fraud:

  • Over-Charging For Repairs
  • Replacing Parts Instead Of Repairing Them
  • Charging The Manufacturer And Consumer For The Same Repair
  • Making False Representations Of Part Quality
  • Substituting Lower-Cost Parts To Maximize Margin
  • Submitting Multiple Invoices For Parts Or Work
  • Conducting Repairs Right Before The Warranty Period Ends
  • Submitting A False Or Inflated Invoice

If you notice any of the situations above are currently happening to your company, it is important to call it out and fight back against automotive warranty fraud. Without standing up to the individuals or other companies that may be hurting your business, you could continue to lose millions every year.

What Can You Do Now?

To prevent automotive warranty fraud within your own business, there are just a few steps you need to take. As an automotive warranty business owner, you need to constantly reevaluate your current inspection partnerships. Looking into your current processes and finding ways that you can make them more efficient and cost-effective is of the utmost importance. Even if you are happy with your current services and partnerships, there could be a better option out there that could save your business thousands of dollars.

Next, you will need to stay up-to-date on industry news. As time goes on, new technologies and solutions are being developed to help business owners create more efficient processes. It's hard to know what technology will become available in the next 10 or 20 years because new developments come out so quickly. Think about how quickly cellphones became popular! All you can do is keep yourself informed and adapt your business accordingly to get the best results.

Once you have educated yourself on the latest developments in the automotive warranty industry, you want to look into partnerships that take advantage of those developments. If your current inspection partner isn't the best fit for your company anymore, that's okay! Nothing is stopping you from looking into other partnerships that might be able to provide better services.

Here are the things you can count on with Wrench's inspection services:

  • Nationwide Coverage
  • Detailed-Oriented and Easy-To-Understand Reports With Photos
  • Quicker Turnaround
  • ASE-Certified Techs Review Each Report
  • Alerts And Reminders Throughout Inspection Process
  • BBB Accredited

After you have found a potential partner, contact them to determine if that company is the right fit for you. The best kinds of partnerships are the ones where both sides have the same goal and both benefit from the partnership. By contacting a potential partner, you will be able to determine what that company is looking for and compare it to your own goals.

Here at Wrench, we are always open to calls with warranty companies that are interested in learning more about our services. If you'd like to chat with Wrench, click the "Contact Us" button at the bottom of the screen or give us a call at 888-231-7965.

Warranty fraud can be very sneaky, don't let your business become a victim. Partner with Wrench's inspectors today!


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