Q & A | Advisor Pressured into Warranty Fraud: What Should They Do?

Foreign.

To your Friday drive by. This is where we answer your questions. You like how I sang that?

I do.

Drive by. Give me fuel, give me fire. Give me.

The numbers.

Those are the exact lyrics, by the way.

Eight, three, three, three, ASK sdr. That's eight, three, three, three, ask sdr. If we play your question on the big show will send you a swag bag of stuff. Fun stuff. Okay, let's go to today's question.

Hey there. Due to the nature of my question, I'm just going to ask to be remain anonymous here, but my question is about warranty fraud in the service department and what exactly you think an advisor should do if he's. If he's confronted with it or if he's. If he's pressured into doing it or.

Is gaslighted into it by a service manager. I'll give you an example. Where I used to work.

There was a lot of warranty fraud being committed. There was very little training on how to write up repair orders that were supposed to be covered under warranty. And so there were a lot of tickets that were getting written up under warranty that should have been customer pay. Instead of properly training us on this, my service manager would falsify the records, get these things covered under warranty, get the dealership paid, still pay the advisor. And it was all unbeknownst to me. I was asked to commit warranty fraud for about a mat for a matter of about $13,000 for a short block that should have been customer pay but was actually so. Should have been. Should have been warranty. Should have been customer pay, but asked that I submit it under warranty with improper documentation and improper photos, et cetera.

And when I told my manager that I was uncomfortable doing this, he needed to find someone else, and I did not want my name associated with it. He told me I was selfish because I didn't want to help out the customer or help out the store.

So my question is, how often do you run into this? I think it would be good for anyone who might be in a similar situation to me to hear your advice. Is this something that you see a lot in the OEM world or even the. The private world? And. And what would. What would be your advice for someone like me that might be faced with this kind of a situation?

I don't want to call him anonymous. Let's give him a name. What do you want? What do you want to name him?

Marty.

Marty. Marty.

This is a great question. I really like it. I think Christian is scared of this question.

Not scared of it. I'm just curious to hear what you say.

You look scared. You got white.

I am white.

Oh, you are?

Yeah. I. Super white.

You tell me that now.

Changes everything. Jeez.

There's a lot to. There's a lot to unpack here.

So.

Yeah, and I think this is a great question because this is. This has been an issue.

A few times. So.

I live by.

The rule of. No, no, no, no. Like, there's no, like, the way that the system is set up. The manufacturers have.

Well, I mean, it's kind of like shoplifting, right? It's like, if you allow shoplifting at Target, we're all going to pay for the. The absorption of that. Right. Target's still going to figure out how to hit their financial goals and so they're going to raise prices on us. So we, the consumer, are going to pay for that. So in the end, if, if we're committing warranty fraud and the manufacturers have to add more, they have to pack more money into the cost of the vehicle because that's where they're putting it. Right? Like, you can, you can look at the breakdown of the cost of a car and there's a certain amount allotted to warranty. It means that the cars are going to be more expensive, which means whoever the manufacturer is we're working for is going to be less effective in the marketplace. The other thing is, is most of the time we're coming in behind the manager that you worked for after the warranty audit. And it. I've seen it.

Well, I've sat there with the factory before.

It's painful.

And you're like, ah, like, I can't. Yeah, I'm sorry. Like, I can't justify this. Right. Like they're, you know, right is right and wrong is wrong. And so the thing like the, the. That manager telling you, oh, you don't care about the customer or whatever. Every manufacturer has a thing for customers called goodwill. And there's a right way and a wrong way to do things. And if a customer has an issue or, you know, there's always a form of goodwill that you can go after for the customer, but that's the right way to do it. Like some manufacturers, there's a certain amount of goodwill you can just give. Some manufacturers, you have to call or talk to the rep or whatever it is. But that's why goodwill is there. Like, if a cus.

If.

If there's a, you know, some sort of gray area or, you know, just something happened, that's what goodwill's for. Not, Not Warranty fraud. So in, in my experience, and it is interesting because I've had warranty fraud with dealers that you would never guess. Like there's a dealer that is number one in their, their category. And.

We found that in the shop they had three time clocks.

Was.

I was very curious why we were doing payroll with stickies. Nobody could tell me. And I was like, well, we should just put this in the. We should just start using the computer for payroll and not do stickies. Well, come to find out they had three clocks all with different. They were all set an hour apart.

So.

And the warranty fraud was a way of living.

In a sense, it was our SOP that the clock time was not real. It was just something that had to be attached to the rocket.

But what it was was irrelevant.

I, this dealer had a big ego too. And there was another dealer that owned, like, I want to say he owned five stores. And for a little while he was the darling of this manufacturer. Like they were giving him problem ones and.

He'S, he's another story. But both of them ended up the same way. I went in, I closed the door, I said, hey, this is what we found. The, the. In kind of both situations, they go, I don't want to talk about that. That's what they said to me in one way or another. And I said, well, I'm sorry, you don't want to talk about it, but we're going to talk about it. And I said, if you allow this to continue and we're not going to address it, we can't do business. And, and I'll tell you, in both situations, it was a lot of money to us as a company. Like, they, they, they had several dealerships, both of them, and it was, it was substantial in both situations. We parted ways because here's the thing. Like one is the, the, the worst thing for, for us is to.

Collaborate with that. Like, once, you know, if we're allowing it, we're collaborating and we're just as guilty as anybody else, then the other thing is, is then, you know, in those situations, we get such a lift in labor sales. I don't want our, our reputation to be, oh yeah, they come in and commit a bunch of fraud and your sales go away, you're going to give it all back in an audit. Doesn't make any sense. Like it's going to tarnish whatever we are doing. And.

I will, I will tell you in one of those situations, the, the guy is not a dealer anymore. And he, he got, he almost went to Jail.

That would make sense.

And it was rampant through his dealerships. And he had dealerships in a few states, too.

I will say in the other one.

And that was such a funny situation because he's like, I don't want to talk about it. And I'm like, well, we're going to talk about it. Like, what you want to talk about.

Wasn'T. Clearly you're, you're aware of it because you don't want to talk about it. So that's a surprise because I thought you'd be as shocked as me. This is, to that guy is somebody I'd hung out with socially, and I never hung out with him again after that. Yeah, he's a douchebag. Honestly, if, if I saw him out at a party, I would, I would walk the other way.

But, yeah, no, I, I. So in your situation, I would tell the, the service manager, hey, one is, that's fraud, and it's illegal, and it's not fair to the manufacturer or to the dealership. I would tell the owner or the general manager, whoever it is, and if they fired me for it, I mean, in both, both the situations that I'm talking about that are the more recent ones that have happened to us, and this has happened throughout my career, we lost a lot of revenue for saying goodbye to them. And I wouldn't do it any other way. Like, instantly that revenue was picked up somewhere else, like, to, like, no, it's not negotiable. It's not right. I wouldn't tolerate it. I would personally quit if, if that was the scenario. And I, I have, I've shown that, like, I don't, I don't negotiate with that sort of stuff. It's not okay.

I think the other important thing to remember when it comes to the, that this is the, the whatever you want to call it, the process, or if it's the procedure that they follow and everything like that. If somebody's committing warranty fraud, what else are they doing?

Well, it's, it always has cousins.

Yes, it's always got cousins. So.

They'Re, you know, they're selling stuff that's not due, or the technicians are like, you know, saying that brakes are at 20% when they're at 50%. Like, the whole thing is kind of related. They, they cheat when they're doing repairs in the first place.

As soon as that guy's fired, the better off that dealership is.

And then paychecks are usually messed with. Like people's pay get messed with. That's the thing that happens in a store that commits a warranty fraud is that it's not the only thing that they've cheated at, you know?

Yeah. And then, like, you were right about gaslighting then presenting as you not being a team player, not caring. Caring about customers is a joke.

There's no. Like. Yeah, I would laugh at that.

Yeah. Like, I. Hey, the. The one thing I would say there, Marty, is you. You. You're right on, man. You could probably just be a little more aggressive and, you know, I mean, it's funny, too. Like, one thing I've learned. I remember. So we. We all worked for. This is early on when I was an advisor, we all worked for a manager. It was pretty big, pretty lame. Like, pretty lame. Very inconsistent, goofy in a lot of ways. And so the advisors came up with this idea that they wanted to write a letter to the owner and they wanted everybody to sign it. And they bugged me. I wouldn't sign it because I. I felt like the letter.

Chicken. Like, I'd rather. Why don't we just tell him? Why don't we tell him, you know? And it ends up. I was right. The. The dealer gets the letter. He yells at the manager, the manager fires a few people.

I ended up leaving. You know, they're pretty soon after that. But the dealer is. He's terrible. Terrible dealer. Didn't care about right or wrong in that sense. I mean, every advisor there signed this thing, and he really didn't even take it seriously. And so I would say that anything that's kind of passive like that is a waste of time. I've just learned to come right through the front door. Like, right through the front door.

They're gonna give the money back in an audit sooner or later, one way or another, because they could. The manufacturers can tell over time. Like, you just. Your claims are so much higher than anybody else when you're doing that. So you're going to get dinged and usually those guys are gone. And then it's the new guy that has to deal with it.

That's. That's just like people that cheat at csi.

Yeah.

It's all. The bill's gonna come due eventually on all that stuff. So I would also say, Marty, that there's plenty of places to work that commit warranty fraud. They don't. It's not everybody.

Did you. Did you think, Marty, because of Back to the future, Marty McFly.

Oh, yeah. Probably because a new movie's coming out.

Oh, it is Back to the future 4. We don't need it.

I feel like, the.

The movies are just the. The only original idea they have anymore is to remake something old.

Yeah.

What about. Why don't we write a movie about the service drive? I had this script I wrote about a service drive called Back a book where there's a dead body in a lone car that keeps getting checked out.

This is great. Can I be the dead body?

No, you let me see. How would I cast you?

I'd probably cast you as a crazy customer.

Okay.

You would be one of the customers driving it around like.

And you're like. Every once in a while you're like.

What'S that smell?

I'd go buy air fresheners. Yeah. Like, I wouldn't look in the trunk, but I would buy air fresheners.

Funny. Thanks, everybody. We'll see you next time on Service Driver Illusion. Thanks for watching this week's Drive By. I hope we gave you something to think about over the weekend. We're uploading new stuff every day, so. So make sure you subscribe and click the bell icon so you don't miss out. If you have a question you'd like us to answer on the show, call 8333-ASK SDR and we'll answer your question on the show. That's 8333 Ask SDR. For special deals on our books and training, head over to offers.chriscollinsinc.com now that's offers.chriscollinsInc.com hi, I'm Chris Collins, and I'll see you in the next video.