clipped by some rebates
The retail world is in a rebate
It's hard to buy electronics, appliances, baby furniture
or a host of other products without encountering at least one offer
to get back part of your purchase price.
But beware: Even if you follow rebate rules to the
letter, you may not see a dime. And following the rules can be very
The rebate theory seems simple. You buy a product,
mail in proof of purchase and the company sends you a check. The
manufacturer and the retailer win because rebates stimulate sales
without reducing the sales price. The consumer wins by pocketing what is often a deep discount.
In practice, however, the rebate business is tricky,
fraught with the potential for misunderstanding and even fraud on
The Federal Trade Commission has been investigating
complaints about rebate practices since 1998. "Rebates are
a headache," says Michael Dershowitz, senior attorney in the
division of advertising practices for the FTC. "Frustrating
for consumers and frustrating for us."
In five years, the FTC has taken action against a
relatively small number of offenders. They include Iomega, Memorex
disk producer Memtek Products, scanner maker UMAX Technologies and
Okidata, all for nondelivery of rebates. It dinged Philips Electronics,
Office Depot and Value America for late delivery. Buy.com was cited
for deceptive advertising that promised free Internet service with
computer purchases without explaining that a three-year contract
Part of the problem is the question of who's issuing
the check. Confusion over where rebates originate leaves consumers
unable to target the problem and get it fixed.
Manufacturers offer most rebates, although occasionally
retailers offer them. But consumers usually aim their frustration
at the industry that manages rebates, called fulfillment companies.
These companies handle the details, but it's not their money. They
collect the rebate forms and proofs of purchase and then tell the
manufacturer (or the retailer) what he owes. When the manufacturer
pays up, the fulfillment house cuts the checks and mails them to
One of the largest fulfillment houses, TCA of New
Rochelle, N.Y., lists slow-paying manufacturers and retailers as
one of the key reasons why it takes so long for consumers to get
their money. "Customers get upset with us when it's really
a manufacturer's or a retailer's problem," says a TCA employee
who wishes to remain anonymous.
Complicated process means
But most of the time, says Dershowitz, the problem is on
the other end. Frequently, the consumer doesn't or can't follow
the often-complicated directions associated with rebates.
"The system is so full of paperwork that somewhere
along the way, some of it is going to get fouled up," he says.
The foul-ups aren't always the consumer's fault. For
instance, Boston lawyer Edgar Dworsky, editor of Consumerworld.org,
points to an offer of a $35 rebate from an Internet electronics retailer on a storage device.
Dworsky thought the rebate was a good deal until he
read the fine print: The storage device had to be purchased between
Feb. 9 and Feb. 16, with the completed rebate request postmarked
by Feb. 17 and received at the fulfillment house by Feb. 24. Under
those terms, notes Dworsky, it was impossible for anyone outside
New York City, where the company has a retail store, to buy the item,
receive it via mail and submit the rebate request in time.
Certainly, manufacturers have a vested interest in
making the process difficult. In their defense, the potential for
fraud exists. TCA says $500 million is lost annually on fraudulent
But part of the appeal of rebates to manufacturers
is the number of people who don't make legitimate claims.
The FTC's Dershowitz estimates that at least 50 percent
of rebates go unclaimed because consumers lose the form, throw away
the UPC code or just can't be bothered to fill out the paperwork
and mail it. And TCA brags on its Web site to its potential customers
that it rejects 800,000 claims a year, "saving our customers
Some state lawmakers are stepping into the rebate
debate. The New York attorney general, for example, explored legislation
that would force manufacturers to post a bond equal to the amount
of money the company would have to pay if every consumer claimed
the rebate. Although the bond proposal did not progress beyond the
discussion stage, state officials nationwide continue to collect
reports of unscrupulous rebaters.
"If consumers would not be comfortable loaning
money to a company, they should feel no more comfortable giving
that company a temporary windfall, to be repaid at a later date
through a rebate," says New York Attorney General Eliot Spitzer.
"Consumers are not banks, and should be careful not to assume
The bottom line: Rebates can provide a nice shopping
bonus, as long as you know
the redemption rules and follow them. But don't buy something
just because the product offers a rebate. If failing to get those
extra dollars will stretch your resources, keep looking until you
find a comparable item with a firm price you can afford.