I’ve long railed against the rip off (2003) that is mail-in consumer rebates. I applauded Best Buy’s decision to drop them, and Marketwatch’s coverage of related rebate problems.

My own consumer experience with rebates has been decidely negative, that I refuse to buy any product with a rebate. Period, end of story, no further discussion necessary. And going by your Feedback on the subject, so has yours.

The NYT discusses this today in "A Growing Anger Over Unpaid Rebates." They quote Matthew Gold, a staff lawyer with Federal Trade Commission, who notes "Fraud is not involved in most rebate problems."

Unfortunately, this misses the key issue: Any process that artificially intereferes with the a negotiated price between a buyer and a seller is itself inherently fraudulent. Once the two agree on a price and terms for a transaction, that should be the end of the negotiation process. The rebate process interferes with that contract — it not only adds an inefficiency, it also adds to the transaction costs of the purchase. The mere prosecution of a rebate is a hidden cost to the transaction 

The entire bureaucratic, limited window, hyper-technical processing system itself is a massive fraud BY DEFINITION. From soup to nuts, it is created, designed, calibrated and exists for the sole purpose of denying rebates — all the while giving the appearance that it is merely a processing step.

To put it more dramatically, rebates are a Cancer on the retail sales process.

Why not actually sell the product for the negotiated price? Why create another level of transactional costs for consumers to obtain the negotiated price? 

The most ridiculous version of this comes from direct sellers — like Dell. What possible purpose can this idotic process be with a direct seller other than to generate a sales price higher than that agreed upon?

When I set up my  own firm, I had a pretty hefty PC order to make. My own experience with Dell was  to negotiate what I thought was a fair price on this order. At the end of the process, they told me a few hundred dollars ($200) of this involved a rebate was — I refused. I told them that "I don’t do rebates, thats a non-negotiable DEAL KILLER, and I’m going to HP. Tell Mikey Dell I said Buh-bye." 

This was after a long process of putting in a bid, tweaking the specs, adding more peripherals. But the Dell salesperson apparently had the ability to credit me the rebate money to the original purchase price — so I got the $200 credited to the purchase pre-sale (otherwise, there would not have been a sale).

I can only imagine the absurdity that somewhere in the labyrinth rebate process, Dell had to process a rebate — to themselves — if only for book keeping purposes. Silly.

The bottom line is simple: The negotiated price should be what you actually pay — without additional administrative headaches, and without further transaction costs. Anything that interferes with a Buyer and a Seller’s Price agreement is inherently problematic. If enough consumers boycotted products that have rebates, the manufacturers — and retailers — might get the clue.

>

Source:
A Growing Anger Over Unpaid Rebates
ALINA TUGEND
NYT, March 4, 2006
http://www.nytimes.com/2006/03/04/business/04shortcuts.html

Category: Financial Press, Retail

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

28 Responses to “Read it here first: Rebates Suck”

  1. Amur says:

    Interesting that Barry mentions Dell.

    Dell denied my Mom a $150 rebate on a new desktop by setting up a process that was so confusing and difficult (mail in voucher, multiple phone calls) that my Mom gave up trying. Mission accomplished Dell!

    But God help me if I’ll EVER by anything from them again.

  2. bob mcmanus says:

    I buy computer components from Fry’s on a regular basis, harddrives, video cards, ram and have never had a problem with a rebate.

  3. cm says:

    If memory serves, I used two mail-in rebates so far, without problems. One was for a specific non-substitutable item that I had (OK, wanted) to buy anyway, and the rebate was just a goodie, the other actually swayed my decision which out of a range of (for me) indistinguishable commodity products to buy.

    Generally I heavily discount rebates and special deals where I have to go through a process and advance trust, but then I’m probably not a good customer by many metrics.

    An aquaintance of mine recently purchased a digital camera and missed the deadline for his $150 mail-in rebate because the window was shorter than he had expected with the measure of attention he apparently paid. Ouch! (Or viewed from the other side, Mission Accomplished!) His rationale for not mailing the damn thing immediately was that he first wanted to make sure there was no flaw with the product that would compel him to return it.

  4. cm says:

    As a side note, there is a (somewhat) similar issue with waiting/vesting periods on employer benefits. I have heard stories of 401(k) matches with vesting schedules extending up to 7 (!) years, something that probably few make without being laid off or being compelled to quit/move on. And esp. with 401(k) matches this is often in the small print, as it is perhaps not typical (?). Vesting on stock options is generally known and is typical.

  5. Fred says:

    I’m with you, Barry. Go get ‘em.

  6. wcw says:

    Unlike Barry, I will buy a product with a mail-in rebate — if, and only if, I would still have made the transaction even without MIR. In the event I actually see a rebate check, it’s a bonus.

    But yeah, I hate ‘em. My experience, since I do make these purchases from time to time, is about 50% — over a large enough sample of rebates, you get half your money back.

    They’re pernicious market distortion devices, in other words. I wouldn’t miss them if they were outlawed.

  7. Paul says:

    I’d love to see the contracts for rebate fulfillment companies. My guess is that their compensation has to be tied to how few rebates they process and not how many.

  8. Cliff says:

    Mail-in rebates allow retailers to exercise price discrimination.
    Shopping at Sears is all about negotiating their complex maze of coupons, sales and mail-in rebates. I actually received over $1800 in rebate checks from them after my last large purchase. But I did lose sleep every night until those checks arrived and cleared — while preparing to go to war with them if I didn’t get my rebates. That is why I never buy anything from Sears except major appliances.

  9. Larry Nusbaum, Scottsdale says:

    THERE IS ABSOLUTELY NO REASON THAT REBATES CAN NOT BE GIVEN AND PROCESSED AT THE P.O.S. MOREOVER, THE CONSUMER IS PAYING THE ALL OF THIS BACK-OFFICE PROCESSING IN THE FORM OF HIGHER RETAIL PRICES. (This reminds of insurance claims. Good luck getting one paid)

  10. Big Al says:

    Here in Canada, giving a mail-in rebate means you pay sales tax on the list price, if they reduced the list price instead the savings would be greater.

  11. Tim says:

    Statistics are hard to come by, but I believe the real reason why rebates exist is that many people never send in the rebate material to claim the rebate. I’ve heard numbers as high as 50 percent, but, this data is hard to come by.

    The psychological effect is that if the buyer paid $1100 for the computer and had a $200 rebate, in his mind he has only paid $900. End of story – regardless of what happens next.

    Many people are unorganized enough to throw away the box before they cut out the UPC label or fail to fulfill some other term of the agreement, so they they just abort the process and go on thinking that they only paid $900.

  12. MLong says:

    I’ve received well over a thousand dollars worth of rebates in the last 5 years. Mainly on two up-to-date computer bundles, one for $150 when they were doing the CompuServe package ($400 rebate & more) and the last one was a new system (tower, printer, monitor) for $350.
    While I’ve had a lot of success, I could easily see where problems would arise. The rebate system seems designed like a legal document to deny claims against the seller.
    I can tell you of two distinct advantages for the seller I found recently with my last purchase. I found a tower that met my needs at, lets say CC co., for the best price ($369). The very next week, most of the big boys (Best Buy, Sears,etc.) had bundle packages in the ads for $319 (same tower + 19in monitor + printer). Naturally, I tried to get a price match with CC co., but I would have had to pay a hefty restocking fee based on the orginial retail price of around $800, not the $369 rebate purchase. In addition, the bundle they offered that week was still more than the others, a week later it was the same. You say, “What about the price match that is so heavily advertised?” Well, that’s the ultimate beauty of rebates; they only match the retail price of competitors, not the rebated prices. So, the price match is completely useless in most situations you would use them for, heavily discounted items.
    I figured out a way around it. I’m not proud of it, but when you’re in a pit of snakes, the best thing to do is act like a snake.

  13. Anonymous says:

    Good to hear that Best Buy’s is getting out of this business as I try to avoid their stores because of the twenty feet of sales receipt tape you get with even the smallest purchase. I find it very annoying. Not doing rebates should save them millions in tape.

    I tought it obvious that the only reason companies do this is to discount the actual cost of the rebate.

    My company recently puchased a number of computers that required the sending in the actual UPC code from the cardboard box! It took a huge envelope and a lot of postage to get those big chunks of cardboard into the mail, not to mention it was extremely annoying.

    I wish you were my boss.

    Next up Barry, why don’t you tackle the silly grocery “discount” cards which are an even bigger rip on consumers. Those really drive me crazy.

  14. Tim says:

    I was just going to write a couple words and then it turned into this big thing:

    Another View on Rebates

    Excerpt:

    A week later, it’s still a $30 printer and the boxes went out with last week’s trash and the rebate forms are nowhere to be found – but that’s OK, because all thoughts about doing rebate work have exited the owner’s consciousness days ago.

  15. cm says:

    Anonymous: Good point to bring up “preferred customer” cards. Judging by my Safeway, which I use mostly as a walkable 24/7 convenience store and not for regular shopping (which I do at smaller stores), it’s really a way of saying “if you have the card, we charge you only the old list price this week, wink wink”.

    I believe these card schemes, and the racket of ever increasing list price and doing irregular “sales”, are a consequence of a few big chains effectively dominating (suburban) grocery markets. I don’t know why this is so. Or is it just “regular” inflation? Anybody?

  16. Jason says:

    I’m not an economist so maybe someone can explaint to me if I’m wrong, but shouldn’t a seller be able to sell a product with a rebate for less than a straight discount. I.e., if the seller knows that X% of purchasers won’t cash in the rebate, those purchasers will subsidize a lower price to those who do send in the rebate.

    I’ve heard grocery discount cards explained to me the same way: They can give shoppers a lower cost with the discount card than with a straight sale because customers without the card will pay a higher price instead of everybody getting the sale price.

    Aside from rebates/discount cards being a hassle, is this thinking wrong?

  17. Denise says:

    The worst offenders are the cell phone companies like Sprint. They offer hefty rebates, but actually getting a check out of these people is like pulling teeth.

  18. Denise says:

    Good point about the sales tax, one pays on the full price, not the rebated price.

    Costco now has POS instant rebates.

  19. I read a posting on bigpicture.typepad.com (http://bigpicture.typepad.com/comments/2006/03/read_it_here_fi_1.html ) about the enormous problems with rebates. I agree. I hope you’ll like a little project I just launched called “Rebate Report Card” (www.RebateReportCard.com). The website lists consumer ratings of companies, based how good they are at keep their rebate promises.

    I know you suggest consumers boycott rebates. I do see the logic in that. So, maybe you won’t like my project, because you might see it as dragging out the problem. But, my thinking is that sites like mine put pressure on companies to improve, or do away with, the whole rebate process.

    Anyway, I’d appreciate it if you could check out the site. I’d be interested in your feedback.

    Thanks,
    Jamie Barger
    publisher of Rebate Report Card
    http://www.RebateReportCard.com

  20. Sarah says:

    I cannot stand rebates as well and one company that really does a great job of not fulfilling them is Office Depot. I have purchased products from them on a few occassions and the most recent was a digital camera in which I would get a $50 mail in rebate from them and a $50 mail in rebate from the manufacturer. I actually got the $50 mail in rebate from the manufacturer but as for the one from Office Depot…forget about it! I tried contacting them on a few occassions and they stated that the item I purchased didn’t have a rebate so I asked them if I could provide the advertisement because I saved that as well as copies of all of the information which proves my model is one that does in fact get a rebate and guess what? Of course no response. I have since emailed them a few times and still no response. I will not shop there ever again!

  21. Seena Wilson says:

    got on the download with Adobe and called Dell. couldn’t get a rebate form. You say I only have 30 days to receive and send back the form to receive my $150.00 rebate, please send me the rebate form. I have a printer,email me the form. I do not want to get on this trail of losers. I paid the amount you asked for and now I need your cooperation.I want it to be sent to the person in charge of rebates.

  22. rebatesux@hotmail.com says:

    I work for a rebate company, called YA out of Mesa AZ and Young America, any idea how i can help take down these lieing , cheating, and stealing fraud artists…..rebatesux@hotmail.com

  23. ALR says:

    I have a serious reservation for rebates that are administered by a 3rd party ‘rebatestatus.com’.

    I have had to deal with this company twice. First, I purchased a cell phone from Amazon for $150 rebate. I took upmost care to furnish all details. However I received a card one day from rebatestatus.com that my rebate cannot be honoured because ‘the receipt submitted is prior to the qualifying period of rebate’. I had to ask Amazon.com to intervene to get my rebate.

    Again, I purchased a Logitech mouse, & its rebates were maintained by the same company. Despite furnishing all details, I received exactly the same post card with the same reason.

    I would like to boycott all rebates managed by this shady company. Unfortunately it is not possible to find upfront on who will manage the rebates for the purchased product.

  24. E WILSON says:

    LETS TALK -SELLS CINGULAR CELL PHONES I AM WAITING 1 YEAR FOR MY REBAT
    NISE REPLYS BUT NO REBATE
    THEY STINK

  25. I am being denied two $100 rebates for two Treo cell phones from a company called Let’s Talk http://www.letstalk.com. We submitted all the paperwork required to LetsTalk within the time period. All Lets talk requirements were met. But every couple months We receive another denial from Let’sTalk and they say we need to resubmit. So we send everything back to Let’s Talk (every time Let’s Talk asks for something different it seems). I believe this is a scam lets talk is playing on their customers. I think they are using rebates as a way to bait customers and have no intention to fulfill their cell. phone orders. I am about to start a letter-writing campaign of complaint letters to Better Business Bureau, their (CTIA?) trade association, and all cell. phone carriers such as Verizon, Cingular, Vonage, Sprint, etc. Refusing to send promised rebates is an unfair business practice and should be discouraged. The irony here is that I have been on the phone with Let’s Talk for hours. I have sent them multiple faxes of complaints. They have no doubt spent more than the $200 I feel I have been ripped off for. And since I have just started to pursue Let’s Talk seriously, I expect the time will increase significantly from this point. I have never written a post like this – that’s how frustrated I am with Let’STalk. But I will pursue this for as long as it takes.

  26. brian says:

    I had to mail in 4-5 mail in rebate from circuit city after buying a laptop. The rebates accumulated to $220. I got 80 of it back and 2 were denied saying i didn’t put the receipt in when i know damn well that i did. It’s all about stats they know a certain percentage won’t mail them in and if people do mail them in and they deny it for no truthful reason they know a certain percent won’t put up a huge fight for 20 bucks. DONT TRUST MAIL IN REBATES THEY DON”T WORK!!!

  27. Ernest says:

    I have found the rebate process to be fine
    with some companies and bogus with others.
    I find that there is no reliable
    relationship between between the prestige
    of the company and the likelihood that they
    will pay the rebate.

    Very few people even know how the Scheme
    works and so I feel that that should be
    explained.

    The merchant who wants to attract your
    purchase offers an apparent refund to allow
    you to believe that you will be spending
    less than the sticker price to purchase that
    Item.

    There will be a refund. What they are
    counting on is that a certain percentage of
    people will not bother to apply or get the
    application process wrong – so that they
    don’t have to comply. Baring that, you will
    be told that you must wait a certain amount
    of time (3 months etc) to receive it. You
    will be waiting while your life fills up
    with a other concerns. Like where
    the rebate for you last purchase has gone.

    After a time they may decide to send you
    the check (which they have been collecting
    interest on for 6. Deciding that they will
    have paid out the rebate to all the people
    who are likely to be intractably concerned.

    Remember, this is a business/political run
    country now. There is nothing to protect
    you. Their contract says that they will pay
    but not WHEN they must. And the “courts” they
    have purchased will back this non-sense.
    So I have literally been told that my 100
    dollar rebate is on it’s way for 8 months
    now. And when they are asked “When” I am
    told “When they have the funds!”. “The rebate
    claims on this item are greater than they
    expected.” (meaning it was a more effective
    tool!).

    I am told that I am not entitled in any way.

    When I bring this up with the merchant I am
    told that it has “Nothing to do with them”
    It’s the rebate agency. Who has nothing to
    do with the product manufacturer who sells
    the item.

    So there you have it. They can take from
    you wallet virtually at will. If not them
    today – than somebody else. And that’s not
    the only way you are cheated on line.
    It is not enough to tell you to “Beware”
    You can not. At some point you trust
    somebody and they are competing with some-
    body else who will cheat you if they don’t
    So the best advice. Shop local and under-
    stand the return policy.

    Ernie Collins

  28. Ernest says:

    I have found the rebate process to be fine
    with some companies and bogus with others.
    I find that there is no reliable
    relationship between between the prestige
    of the company and the likelihood that they
    will pay the rebate.

    Very few people even know how the Scheme
    works and so I feel that that should be
    explained.

    The merchant who wants to attract your
    purchase offers an apparent refund to allow
    you to believe that you will be spending
    less than the sticker price to purchase that
    Item.

    There will be a refund. What they are
    counting on is that a certain percentage of
    people will not bother to apply or get the
    application process wrong – so that they
    don’t have to comply. Baring that, you will
    be told that you must wait a certain amount
    of time (3 months etc) to receive it. You
    will be waiting while your life fills up
    with a other concerns. Like where
    the rebate for you last purchase has gone.

    After a time they may decide to send you
    the check (which they have been collecting
    interest on for 6. Deciding that they will
    have paid out the rebate to all the people
    who are likely to be intractably concerned.

    Remember, this is a business/political run
    country now. There is nothing to protect
    you. Their contract says that they will pay
    but not WHEN they must. And the “courts” they
    have purchased will back this non-sense.
    So I have literally been told that my 100
    dollar rebate is on it’s way for 8 months
    now. And when they are asked “When” I am
    told “When they have the funds!”. “The rebate
    claims on this item are greater than they
    expected.” (meaning it was a more effective
    tool!).

    I am told that I am not entitled in any way.

    When I bring this up with the merchant I am
    told that it has “Nothing to do with them”
    It’s the rebate agency. Who has nothing to
    do with the product manufacturer who sells
    the item.

    So there you have it. They can take from
    you wallet virtually at will. If not them
    today – than somebody else. And that’s not
    the only way you are cheated on line.
    It is not enough to tell you to “Beware”
    You can not. At some point you trust
    somebody and they are competing with some-
    body else who will cheat you if they don’t
    So the best advice. Shop local and under-
    stand the return policy.

    Ernie Collins