Warranty Fraud Management

Matti Kurvinen is an independent consultant focusing on service strategy and operations in general and warranty management in particular. After twenty-three years and various leadership and content expert positions in an international top-tier management consultancy, he started his own consulting practice in 2014.
 
Ilkka Töyrylä, Dr.Sc., is a management consultant with over twenty years of both industry and consulting experience. His key areas of expertise include service operations and warranty management. His doctoral thesis on traceability studied different opportunities for utilization of item level product and serial number data, warranty management being one of the application areas.
 
D.N. Prabhakar Murthy is professor emeritus at the University of Queensland in Brisbane, Australia, where he lectured on various topics in engineering and technology management for over 30 years. He has researched many different topics in reliability, maintenance, and warranty, resulting in many books and technical papers.

Cut warranty costs by reducing fraud with transparent processes and balanced control
 
Warranty Fraud Management provides a clear, practical framework for reducing fraudulent warranty claims and other excess costs in warranty and service operations. Packed with actionable guidelines and detailed information, this book lays out a system of efficient warranty management that can reduce costs without upsetting the customer relationship. You'll dig into the whole spectrum of warranty fraud, from simple sloppy procedures to systematic organized crime, and get to know the fraudulent parties, the victims, as well as the objectives and methods of the fraudulent activities in different scenarios. You'll learn how to implement controls to detect and reduce fraudulent claims and decrease the overall warranty costs. The impact of fraudulent claims is plainly spelled out alongside detailed descriptions of typical symptoms and process gaps present in diverse companies. A comprehensive, multi-modal framework for robust warranty management is presented as a template for revamping your own company's strategy.
 
Fraudulent warranty claims occupy an estimated 3-15 percent of the average company's warranty costs, which generally average between 1-4 percent of sales. Many companies are unaware of the issue or struggle to take action against the claims for fear of upsetting business partners, or because they lack tangible evidence. This book details a robust warranty control framework that institutes transparency and control over the whole warranty chain--supporting the process far beyond just fraud reduction.
* Understand the different actors (customers, sales channels, service agents, warranty providers, etc.) and different forms of warranty fraud
* Uncover issues in your company's warranty processes
* Learn methods to detect and prevent fraudulent activities
* Implement a robust system of warranty cost control
 
Warranty fraud is a major cost-control issue for most companies, but the sensitive nature of the topic leaves most reluctant to share their experiences and divulge their strategies. Warranty Fraud Management brings warranty fraud out into the open, and provides a clear, actionable framework for cost-savings through fraud reduction.

Foreword xiii
 
Preface xvii
 
Acknowledgments xxiii
 
About the Authors xxv
 
Chapter 1 Overview 1
 
Warranties 3
 
Warranty Servicing 4
 
Warranty Costs 5
 
Warranty Fraud 6
 
Impact of Warranty Fraud 9
 
Warranty Fraud Management 10
 
Study of Warranty 10
 
Goals of the Book 12
 
Structure of the Book 12
 
Note 14
 
Chapter 2 Products and Product Warranty 15
 
Products 16
 
Product Performance, Failure, and Reliability 19
 
Product Maintenance 24
 
Product Warranty 26
 
Maintenance Service Contracts 36
 
Insurances 37
 
Notes 38
 
Chapter 3 Warranty Servicing 39
 
Parties in the Warranty Service Network 40
 
Warranty Service Process 46
 
Outsourcing of Warranty Service 54
 
Contracts 56
 
Notes 62
 
Chapter 4 Warranty Costs 63
 
Different Perspectives 65
 
Factors Underlying Warranty Costs 68
 
Warranty Cost Metrics 72
 
Warranty Reserves and Accruals 77
 
Warranty Cost Control 78
 
Notes 79
 
Chapter 5 Warranty Management 81
 
Evolution of Warranty Management 82
 
Service Life-Cycle Perspective 84
 
Product Life-Cycle Perspective 95
 
Organizational Structure 100
 
Warranty Management Systems 105
 
Warranty Management Maturity Models 122
 
Notes 124
 
Chapter 6 Warranty Fraud 125
 
Fraud in General 126
 
Actors and Victims of Warranty Fraud 128
 
Classification of Warranty Fraud 129
 
Fraud Patterns 130
 
Consequences and Impacts of Warranty Fraud 135
 
Customer Fraud 139
 
Service Agent Fraud 147
 
Sales Channel Fraud 162
 
Warranty Administrator Fraud 166
 
Warranty Provider Fraud 169
 
Notes 175
 
Chapter 7 Warranty Control Framework 177
 
Contracts 180
 
Transaction Controls 181
 
Analytics 183
 
Service Network Management 187
 
Chapter 8 Customer Fraud Management 189
 
Customer Contract 190
 
Customer Entitlement 200
 
Material Returns Control 207
 
Analytics 208
 
Notes 213
 
Chapter 9 Service Agent Fraud Management 215
 
Service Agent Contract 216
 
Entitlement and Repair Authorization Processes 237
 
Claim Validation Process 239
 
Analytics 248
 
Material Returns Control 278
 
Service Network Management 280
 
Notes 291
 
Chapter 10 Fraud Management with Other Parties 293
 
Sales Channel Fraud Management 294
 
Warranty Administrator Fraud Management 299
 
Warranty Provider Fraud Management 305
 
Chapter 11 Structures Influencing Warranty Fraud 307
 
Effective Service Process 308
 
Service Organization 315
 
Notes 318
 
Chapter 12 Implementing a Warranty Control Framework 319
 
Assessing The Current Situation 320
 
Crafting an Improvement Plan 322
 
Defining Policies and Rules 322
 
Building the Capabilities 323
 
Deploying the Change 325
 
Business Case Considerations 327
 
Implementation Challenges 328
 
Achieving the Transformation 329
 
Chapter 13 Epilogue 331
 
Opportunities to Improve Warranty Control 333
 
New Research into Warranty Fraud 335
 
Appendix A Detailed Claim Data 337
 
Appendix B Agency Theory 343
 
Appendix C Game Theory 347
 
Glossary 351<

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