By Michael G. Charapp
Charapp & Weiss LLP
Recall repairs are critical to manufacturers and to dealers. For manufacturers, federal law requires that recalls be completed. Manufacturers have been criticized for not putting sufficient emphasis on completion of repairs. They are under pressure to make sure vehicle owners respond to recall notices and repairs are completed to the extent possible.
Recall repairs are also critical to dealers. Manufacturers depend on dealers to do the work mandated under federal law. Dealers have historically been the recall repair providers for manufacturers. With the pressure manufacturers are under to be sure repairs are done, dealers should assist to make sure their customers know about recalls, schedule the vehicles for repairs, and ensure recall repairs are completed.
Recent developments have shown there is a challenge for dealers. How do you know that a recall repair shown as completed in your service department has actually been completed? This is not a hypothetical question. Dealers have been the subject of recall audits by manufacturers to check on completion of work. If work is not done as shown on service repair orders, who are the culprits? Technicians who think they can get away with something and run a recall repair scam to defraud the dealers who employ them and the manufacturers who pay for the work. Usually, some factors are in place for technicians to feel they can cheat the dealer and the manufacturer:
- The repair is seen as unimportant. The defect is not something that is seen as something that can cause a breakdown or lead to an accident. Instead, it may be something as simple as a door or liftback latch.
- The repair is small. It is the replacement of a small spring or similar small part in a larger assembly that is seen as non-consequential.
- The time granted to do the work is seen by the technicians as inappropriately short. While the fix may be to a small part, actually undertaking the repair may be time consuming. The time allotted by the factory may be seen as insufficient by the technicians.
The chargebacks that can result from a widespread failure to do recall work can be very substantial. Once a few technicians see they can get away with pencil whipping recall repairs without actually doing them, others may engage in the practice. The result may be hundreds or even thousands of claims that are unsubstantiated.
One should not expect that, despite the huge amount that may be at stake because of a chargeback for uncompleted repairs, there will be an opportunity to pare that back through negotiations and challenges. Manufacturers take their recall responsibilities seriously, as they should, knowing that the federal government expect recalls to be done. State regulators or other decision makers in cases challenging large chargebacks are probably not going to be sympathetic to a challenge to uncompleted recall repairs. While technicians may see gradations of seriousness on recalls, regulators and decision makers will not be in that position. They will see all recalls as important, and they will not be sympathetic to uncompleted recalls.
So what does a dealer do? Make sure the work is done correctly the first time.
1. Make your staff aware of your policy that all recall repairs must be completed as required.
2. Make sure technicians are trained with respect to each type of recall repair and how the work is to be done.
3. Regularly self-audit recall repairs done in your service department.
4. Review the time spent by your technicians. The time allotted by manufacturers is seldom generous. Beating factory time on recall repairs is unusual. If your technicians are shown as regularly beating factory time allowances on recall repairs, investigate whether they are actually spending the time to do the work to completion.
5. Require all old parts to be returned on every job. If a job is not being done, the old part will not be available. Your best bet for determining if the actual work is being done is to require that the old parts are returned.
6. Maintain the old parts along with the records on each recall repair. While this may seem excessive, remember that the chargebacks for uncompleted recall repairs will be even more substantial.