These are the times that try men's souls."  Thomas Paine wrote those words a few months into the American Revolution and there has been no lack of trying times since. Every adversity in life will often show the character of people. It certainly can be a trying time right now working in a GM dealership for some areas of the country. The service business is drastically down for some shops.

When business slows, the temptation to play games with your warranty claims rises. In the past few months there have been more instances of really bad decisions on the part of some technicians, advisors and managers. If such things begin to show up during routine reviews by service reps, just imagine how many false or fraudulent claims may have stayed below the surface. All that hidden liability can make it hard for some to sleep at night..

You can start the New Year with some added assurance that your claims are legitimate by creating a system to help identify and weed out fraudulent activity in your dealership.

According to the Association of Certified Fraud Examiners (ACFE), there are certain patterns of fraud. There are also well-established ways to prevent the unwanted activity. Start by appreciating how most fraud is discovered. According to statistics from ACFE, fraud is usually uncovered in the following manner;

Law Enforcement  .............. 0.9%

(GM) Audit ............ 10.9%

Internal Controls ............ 18.4%

Accidental Discovery 21.3%

Internal (Warranty Audit)............ 23.8%

Tip........ 39.6%

As you can see, the biggest chance you have of catching fraudulent activity is with things that you can do internally and without GM's help. And the single greatest method of discovery is from a tip-off from someone who has observed or has knowledge of the activity.

   Here are the steps the ACFE recommends to help encourage those tips to come into the dealership.

Set up a fraud tip line. You could hire out or set up a dedicated phone number to field anonymous tips, but that level of sophistication is not necessary for most shops. A suggestion box or other informal notice can be just as effective. The more important thing is to communicate to employees, suppliers or anyone who comes in contact with your dealership that they have an avenue to anonymously report suspicious, unethical or fraudulent behavior. We have first-hand experience that this method of detection is used by certain, maybe all, manufacturers.

Consider tools you already have. If your dealership has a website, you probably have a spot where someone can fill out a form to request information, apply for a job or more. Webforms are great as it is an easy, anonymous avenue. Just make sure that the completed forms are e-mailed to the right inbox.

Don't set limits. You can't tell people to only post, call, or slip you a note that pertains to warranty fraud. There are a lot of bad things that could happen and you should hear about everything that could be detrimental to your dealership.

Explain what happens after the tip. Providing  for the submission of tips is one thing, taking action is the critical step. While most of the information you will be provided will be considered sensitive, it is important to report back what was accomplished.

Happy holidays and New Year!

It is that time of year when our thoughts turn from the shop back to where they belong - our family, our friends, our community. From everyone here at DealersEdge, we wish that this is the most joyous time of year for you and yours. And we hope that the coming year is your most peaceful and prosperous ever. We sincerely appreciate the time we have spent together during 2006 and look forward to continuing to provide all the tips, hints and helps we can in the New Year!