Chapter 8Customer Fraud Management

The four types of customer fraud (based on motivation and methods indicated in Figure 6.3) introduced in Chapter 6 are as follows:

  1. Refund or replaceUnjustified return claiming the product to be faulty, although there is nothing wrong with it, or bringing in a fake to get replacement or refund not entitled as per the warranty terms.
  2. Service cost avoidanceTo get an out-of-warranty service that the customer is not entitled to.
  3. Extra products or earningsClaiming and reselling replacement parts or products.
  4. SLA improvementClaiming better service level than the customer is entitled to.

In this chapter, we look at detection and prevention of these types of fraud using one or more of the four elements of the warranty control framework discussed in Chapter 7. The link between the control elements and the types of fraud is shown in Table 8.1. When applying these control mechanisms, customer satisfaction needs to be taken into account, and sometimes unjustified claims accepted to retain the customers.

Table 8.1 Fraud Detection and Prevention Activities against Different Types of Customer Fraud

Customer fraud categories
No failure return Service cost avoidance Claim and resell SLA improvement
Customer contract
Customer entitlement
Materials returns control
Analytics

Customer Contract

Warranty contract with a customer or warranty terms and conditions for consumer products define the boundaries of warranty ...

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