Opinion ID: 202158
Heading Depth: 3
Heading Rank: 2

Heading: The charge back dispute

Text: 19 Underlying the dispute about the information required in a supplemental claim was GM's concern that Darling's was over-charging it for warranty repairs. Because, as a practical matter, GM does not receive any of the actual repair invoices associated with a dealer's warranty claims, it monitors warranty claims by exception. In other words, GM pays warranty claims without verification that the dealer actually performed the work or performed the work in compliance with the dealer agreement. 6 20 In order to detect excessive warranty claims, GM analyzes the claims through its Automated Warranty Administrative Review Expert (AWARE) system. When AWARE identifies a dealer with elevated warranty levels, GM notifies the dealer and provides it with materials to conduct a dealer self-review. These self-reviews allow the dealer to audit itself and identify any instances in which it has over-charged GM or otherwise departed from the Dealer Agreement or Service Manual. If a dealer continues to exhibit apparently excessive warranty costs, GM may issue additional self-reviews and, eventually, may conduct its own claims expense review of selected records at the dealership. 21 Darling's had one of the highest cost per vehicle serviced and lowest customer satisfaction ratings of all the GM dealers located in the zone covering northern New England. During 1999 and 2000, its warranty claim submissions indicated elevated levels of warranty costs compared with other dealers. After Darling's performed three self-reviews, GM conducted a claims expense review in August 2000. The claims expense review revealed a number of improper warranty practices by Darling's: (1) seeking reimbursement for goodwill repairs made to cars covered by Darling's extended service contracts, 7 (2) charging labor hours in excess of those provided under GM's time guidelines, and (3) failing to retain parts replaced in connection with warranty repairs. As a result, GM debited $4,245 from Darling's account. After correspondence between the parties, GM agreed to re-credit Darling's all amounts except for $1,279, the amount paid to Darling's for warranty repairs for which Darling's did not retain parts as required by the Service Manual.