Warranty Fraud Management

Chapter 7Warranty Control Framework

We discussed the different actors responsible for warranty fraud and the different fraud categories in Chapter 6. An exhaustive list of them cannot be made, because there can always be new actors and new and unknown methods of warranty fraud. However, we have aimed to cover the most common actors and most common scenarios. Due to the diversity of the scenarios, it is very difficult to develop a one-size-fits-all tool or approach to tackle warranty fraud once and for all. A combination of approaches, tools, and methods is required to detect and prevent warranty fraud. We call this combination the warranty control framework. Having a proper warranty control framework not only improves fraud detection and prevention, but also provides transparency and cost control over warranty management as a whole.

We confine our attention to frauds where the warranty provider is the victim and focus on customer and service agents as the actors of fraud. The framework is composed of four key elements, with two of them having more than one subelement, as shown in Figure 7.1. The four key elements are:

1. ContractsThis defines the interaction between the warranty provider and the customer, the service agent and other parties in the warranty chain, and the rights and duties of each of them. Contractual rules are the basis for customer claim entitlement and service claim validation.
2. Transaction controlsThese include processes and methods for handling customer warranty ...