Rebates to become more of a scam

Rebates to become more of a scam

Summary: I've never hidden the fact that I consider rebates to be nothing more than a legalized scam. The customer pays full price for a product and is then faced with all the fun of filling out paperwork and jumping through a series of hoops (a bit like completing a tax return while running an assault course). If the customer completes all the challenges, there's a chance that they'll see their rebate check. If they stumble at any stage in the game, it's tough luck. Things are about to get worse - just in time for the holiday season.

SHARE:
TOPICS: Patents
44

I've never hidden the fact that I consider rebates to be nothing more than a legalized scam.  The customer pays full price for a product and is then faced with all the fun of filling out paperwork and jumping through a series of hoops (a bit like completing a tax return while running an assault course).  If the customer completes all the challenges, there's a chance that they'll see their rebate check.  If they stumble at any stage in the game, it's tough luck.   Things are about to get worse - just in time for the holiday season.

Yep, people jump through all the hoops and then don't cash their rebate checks! Why do stores and vendors choose rebate schemes over simply cutting the price?  After all, wouldn't it just be cheaper to drop the price than bother having to administer the rebate scheme?  Nope.  The reason is that the price drop would apply to everyone who bought the product.  A rebate puts a number of obstacles between the customer and their rebate.  The idea is that the customer stumbles at some stage (maybe they forget about the rebate, or they make a mistake when filling out the form, or maybe they lose the sales receipt) and the store of vendor wins.  When a customer fails to claim their rebate, this is known in the trade as a breakage.  When a breakage occurs, the customer loses out and the store or vendor wins (because they get to keep the money!). 

Now, you'd be right if you guessed that companies behind the rebates work hard to "encourage" breakage.  There are countless tricks that companies use to try to boost the breakage numbers.  Now Parago, the company behind Circuit City rebates, has been granted a patent (U.S. Patent No. 7,120,591) for an online redemption system for product rebates.  Sounds innocent enough to begin with. 

"... stem and method for computer-aided rebate processing ... which substantially eliminates or reduces disadvantages and problems associated with previous systems and methods."

Keep reading ...

"The present invention satisfies a need for a more consumer friendly method for processing rebates that maintains a breakage rate ..." (emphasis added)

There are some other eye-opening sections.  Take this for example:

"By requiring post-purchase activities, the rebate offerer attempts to reduce the number of successful rebate claimants. Breakage occurs when a product bearing a rebate is sold, but the rebate is not successfully claimed. Because rebate programs offer the potential for breakage, manufacturers can offer a more valuable rebate compared to a straight reduction in product price." (emphasis added)

It goes on:

"... promotion sponsors can offer promotions with multiple disbursement options designed to recapture a rebate by allowing a consumer to apply rebate credits to the sale of additional goods and services. Furthermore, the rebate processing system provides a user friendly interface, yet retains hurdles sufficient to maintain breakage."

What are the ways that breakage occurs?  The patent sheds light on this:

"Breakage refers to any event that prevents a rebate transaction from being completed, for example, denying based on bad verification materials such as receipts or UPC symbols, denying based on improper purchase dates or purchase price, or slippage from checks issued but not cashed."

Yep, people jump through all the hoops and then don't cash their rebate checks!

If you do buy something that offers a rebate, then remember to stick it to the man and do your best to make sure you get what's coming to you!  Oh, and remember to cash any checks you get!

What are your thoughts on rebates?  Do you like them and have you saved money by taking advantage of them or do you think that they are a scam?  Do you let rebates influence your purchasing or do you ignore them? 

Topic: Patents

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

44 comments
Log in or register to join the discussion
  • Never ever buy something because of the rebate

    I think one has to take the philosophy to ignore rebates when making a purchasing decision. Even if you fill out all the forms correctly, frequently companies fail to honor rebates, and you're left with very little recourse.

    So if you're buying something, ignore the offered rebate. Are you still willing to buy it at that price? If so, get it, and by all means fill out the rebate form, but never, ever base your buying decision on getting the rebate, as odds are you won't ever see it.
    tic swayback
    • I agree...`

      But wait for the sale, even if it's not as much as a rebate you can bet stores will continue to do sales.

      That's how they get many customers in. I'll take a 40 dollar price drop over a 100 dollar rebate any day.
      ju1ce
    • My Philosophy Exactly

      If it's not worth the full price to me, then it's not getting bought.

      With the right attitude, it can add some excitement to the transaction, though - makes buying something seem like a trip to Vegas - maybe I'll beat the odds and get some cash back :)!
      brble
  • This reminds me...

    ...of a John Carroll commentary from several weeks ago on the subject of how to get your plane ticket cancelled without getting a refund (all you have to do is miss one leg of the flight and all of the subsequent ones are automatically canceled). Why is this done? Because it's an extra revenue stream that few people are going to complain about.

    Good reason to think twice before you're swayed by a rebate offer.
    John L. Ries
  • rebates

    Unless the rebate is instant I purposely will not buy anything offering a rebate since I know myself well enough to know I won't remember to do everything
    dcooper
  • hacking the rebate system

    I once dated a woman who made money on rebates. I'm not entirely sure how it all worked out, except that she watched rebate offers constantly, kept all UPC codes and receipts organized in a highly developed filing system, and traded UPC codes and receipts with other rebaters over weekend breakfasts.

    She didn't make a ton of money but she made enough to make it worth her while. I do remember she once had 15 bags of frozen potatoes in the freezer... I tried to have her explain it all to me once, but I didn't quite get it.
    pkstephens
  • Never jamais nie

    I never ever will buy anything with a rebate! I have been ripped off
    too many times with this garbage. I buy all computer stuff and
    peripherals on the internet
    dmcewan@...
  • LOVE rebates!

    I love rebates because with a little bit of work I can get a better deal than would be possible by simply cutting the price for everyone. I usually finish jumping through all the hoops for a given rebate in about 10 minutes. This includes keeping a list of each rebate mailed (and when). When the rebate arrives, I cross it off the list.

    I've successfully received dozens to hundreds of rebates in the past 10 years or so and I've only had one not come through.

    Granted, you have to know yourself well enough to know what amount is too small to bother at all. For me, $15 is about the minimum I'll attempt.

    I've bought a $200 APC UPS for $100, a $150 cordless phone (multiple handsets) for $20, and a $150 hard drive for $40. Those are savings well worth a few minutes of my time.

    FWIW, Staples' Easy Rebates have been the easiest to redeem.
    bmgoodman
  • There is a recourse at some stores

    such as Frys. First, make sure you make a copy of everything in you send with the rebate, including the UPC code. Then, keep track of the date your rebate is supposed to come in your Outlook calendar, and if it does not come, go to the store (with your documentation) and complain.

    I have often received rebates promptly this way. However, I agree with everyone that posted here, which is that I (1) never buy anything unless I absolutely need it, and (2) I buy the product only if I would buy it even without the "benefit" of the rebate.

    I also ignore any rebate offers under $10 as not worth my while. The shennanigans that vendors are engaging in beg the question, vendors: if you issue a rebate because you want the customer to buy your product over a competitor's, why play games with customers? These obnoxious games only ensure that the customer's buying decision is completely impartial, i.e. they buy only on the merits of your product, and only if they need the product - the rebate is no inducement to "impulse buying" or buying your product instead of a competitor's. So why do it in the first place?
    legalista
  • Rebates

    I HATE REBATES. I NEVER buy because of a rebate.
    The only time I deal with them is when I was going to buy the prouduct anyway. They are ALWAYS a PAIN.
    davisnewman
  • Rebates work OK for me

    So far, I've gotten about 15 rebates back. Only one has been denied. I like Staples' program the best - all online, nothing to send in. And I've gotten every one of those back within 3 weeks. So, yes I do buy things based on rebates. It is a bit of hassle to read all the fine print and comply with every demand, but so far, it's worked and the deals I've gotten *seem* to be better than with simple price cuts.
    tonywhite
  • Total scam

    I myself lost many rebates in the process. And you've just hit the nail on the head with their new ideas. I recently bought an Acer monitor from Tiger Direct with a $60 rebate. The .pdf file downloaded turned out to look like a rebate form, but it only had directions where to go on the web to access the real rebate form. Then they give you options for "instant" rebate, which I passed up, because I did not want to give them my account numbers. Still, even though I opted for the check to be sent to me (of course 8-10 weeks)in order to complete the forms I had to fill out what type of business I am in, and what position I have. Of course,I had to give them my address - how else would I get the check. And trust me - the process couldn't be more complicated - going from one web site to another, getting the address of the third one to log in. Waiting for approval, etc.
    I don't think I will ever go for a rebate again. They really do everything they can to make you fail.
    JerseyReader
    • Total scam, cont'd

      I forgot to add, despite all the web forms to fill out on different pages - I still had to mail all the paper receipts, giving it a chance to be lost in the mail, or who knows perhaps purposefully destroyed (if they start going that far in creating hurdles).
      JerseyReader
      • Lost in post = breakage!

        Clever trick. Also, chuck a handful of receipts in the shredder every so often ...
        Adrian Kingsley-Hughes
  • I got a check once and didn't cash it in on time

    They deliberately put in a 3 month time limit from the time they issue it, not from the time you get the check. Rebates are a scam. They know the probability of someone following through and cashing a check is probably 1 in 3 if that.
    georgeou
  • Netgear just pulled this on me.

    I recently purchased a Netgear Gigabit switch. I fulfilled all of the hoops that Netgear put in the form. About a week ago, I received a postcard that merely stated that my rebate was being denied because I didn't meet the criteria. That was it - no further information. I went nuts. Luckily, I make copies of everything I ever send in a rebate. I called Netgear and told them that I was going to go legal against them unless they didn't reconsider. I also faxed them the rececipt that clearly indicated that I purchased the item in the proper window. They better do the right thing here. It is total BS and it makes me want to never purchase another product from them ever again.
    bneals
    • Send them this URL

      I think that an effective tool to fight this kind of fraud is to let the seller know that we won't go away quietly while they keep our money. I would send them the URL to this blog to let them know that thier methods don't make good advertising. You could offer to post a retraction or explaination if they make it right. ZD is not without a few members and those are exactly in the target group of consumers who might buy from Netgear.
      novice_1
  • I think that people fall into one of two rebate camps ...

    Camp A - Those that have had a lot of success with rebates
    Camp B - Those who have had a bad experience with rebates

    I wonder if there isn't more going on between the two camps. If I were in Camp A I might be happy that there are people being forced into Camp B through breakage because that allowed me to have a better discount.

    I also think that there's an eBay/lottery type mindset going on too - the more you play the rebate game, overall the more likely you are to win. The more someone "wins" at the rebate game, the more likely they are to play again.

    To top that off, why not have a scheme where you jsut plain "forget" to send checks to, say, 10% of those who've made a successful claim. I wonder how many would:

    a - Remember
    b - Have all their details
    c - Know who to contact to kick up a fuss
    Adrian Kingsley-Hughes
    • I've never had a problem with rebates...

      ...as far as I know.

      Sometimes I've gotten a rebate check in the mail. But at the same time, I'm sure there are a bunch of rebates I applied for that never arrived. Since they seem to take at least 6 months to be processed, most people forget they even exist by the time they're either denied or fulfilled. So realistically, there's probably a camp out there who thinks they've had success with rebates but don't count the ones they've forgotten.

      As I said way above, make your buying decision based solely on the purchase price. If you happen to get a rebate back one day, consider it a bonus.
      tic swayback
  • Parago's Usual Tricks

    Parago operating as rebateshq.com has made rebating a nightmare. However I thank them for the wording in their patent applicaiton. Only fools with a track record like this would hand a class action attorney the sword to lop of their stupid heads, and they have done it.

    I currently return any item with a rebate that requires the use of Parago under any of its names. I inform the store it is their fault for using Parago and I am happy that they got hit twice for credit card company fees (purchase and credit). If enough of us do this, eventually all stores and OEMs will get honest and handle rebates the way CompUSA handles its own rebates.
    oigfree