The Truth Behind Rebates
We see them everyday and everywhere. Rebates, that is. Retail outlets, electronic stores, even grocery shops have mail-in-rebates now. The price tags on items mention that if you buy something for a certain price, you will get a mail-in-rebate in the form of a rebate check for a certain amount at a later time. Such offers sound enticing, but in reality they are usually a scam. Rebates are used by most companies to make customers spend more and wait around for a rebate check that usually never comes in the mail.
What rebates really mean
Rebates mean that you pay a company a certain price for an item and that company mails you some money back later. The process described by companies is simple: you buy something, mail in a rebate form along with a copy of your purchase receipt, and then wait for the check in the mail. What most companies do not tell you is that the last part of the rebate filing procedure is where the problem lies for majority of the customers: the rebate check never arrives in the mail. Customers are then told, most of time, a myriad of reasons why their rebate claims was not processed. Majority of the customers who sent in rebate forms during the past 5 years have not received their rebate checks, and they never will.
There are companies out there that specialize in handling rebates for big companies, and many of them promise their corporate clients that they will do their best to ensure that the percentage of customers who get their rebate money back remains low. While many call such business acts unethical, many rebate processing services call that a business promise. Such and similar tactics do not go unnoticed, however. Best Buy got sued in 2004 by Ohio’s Attorney General for not honoring rebates, and that shed more light on the whole rebate scenario in the media that year.
One of my personal experiences with rebates
If you are expecting a rebate, you are usually depending on mere chance to get your money back. I purchased an eMachines system in 2004 and mailed in a $200 rebate form to eMachines, for both the computer and the Hyundai monitor that came with it. I waited for a month and then contacted their customer support, only to find out that they needed more information from me. Obviously, since it was my money, they were not going to call and say “Hey, we want to give you your money so we need more information.” Instead, I had to call them and ask about the rebate myself. After faxing in more papers that they needed, I was told to wait a month for my check to come in the mail. After another month, I was given several reasons ranging from them needing a copy of my original receipt again to them needing my mailing address again to them having to check why they had not sent out a check to me yet, and so on. I never got the rebate money back.
8 reasons rebates are a scam
Many people question why companies will not simply make the customers pay less in the first place instead of offering rebates. Following are the top 8 reasons why:
- Most customers never send in a rebate form.
Only about 10% of all eligible customers send in their rebate forms. Many companies depend on this. Online orders usually take about 7 business days to be delivered, and mail-in-rebates have to be mailed with the invoice, which is usually only mailed with the online orders, within 30 days of the purchase date. Thus, online customers lose around 7 days to begin with and are already at a disadvantage to begin with.
- Most rebate forms are rejected by companies.
Most of the rebate forms mailed by customers are rejected for various reasons by the companies. Whether it is for late rebate submissions or for incomplete forms, most rebate forms are rejected by companies and the customers are always notified via the standard postal mail, which itself usually takes several days or even weeks to arrive. By the time it takes for a customer to start sorting things out, they usually give up because of the hassle involved.
- Rebates are used to attract more sales during busy shopping seasons.
Companies usually go on a rebates-offer spree around the busy shopping seasons, telling customers through price tags that a certain expensive TV costs “only $199*” while that * means that there is probably a mail-in-rebate on such an item. Some prices tags do not even mention such disclosures, and people have to find later on that a rebate is involved. Rebates are simply another way of having a sale and attract a lot of people.
- Customers lose money because of the actual price of the item at the time a rebate check is received.
By the time it takes to get the rebate, one may have paid more depending on the value of a product. For example, if you paid $200 for a stereo system in January and got $50 in rebates after 5 months in June, you may have lost money as by June the stereo may be selling for $120 without any rebates.
- Customers still pay taxes on all the money sent back to them while the company keeps the extra tax.
When you pay full taxes on an item, the company never refunds you the tax you paid for the amount of money you get back in the refund. For example, if you pay $550 on a computer that comes with a $90 mail-in-rebate, any tax you pay for that entire $550 amount is lost completely, as the rebate sent back [which is the $90] does not include the taxes you paid for those 90 dollars. This extra sales tax stays with the company.
- Most rebates require cutting the UPC label from the product box, meaning you can never return that item.
Most companies require customers to send in both an original receipt and the UPC bar code that is present on almost all boxes for things you buy. Cutting this UPC sticker from the box means that you cannot return that item for a refund in most cases. Thus, companies that do not like honoring rebates actually make sure that you can never return the item for a full refund if you are not satisfied with your purchase.
- Many rebate checks are never cashed or get lost in the mail.
Almost all rebate checks are sent by standard mail and many of them get lost in the mail. Checks usually gets canceled when not cashed within 6 months. Some companies send rebate forms in unmarked envelopes or in envelopes that look similar to envelopes used by most junk mailers. Many customers simply throw such envelopes away, which plays to the company’s advantage. I am not yet sure if the companies do this on purpose, but I am keeping a track of which companies do this and will probably share my results in the future.
- Interest is made on the rebate money by companies.
The money that is sent back as a rebate to a customer is held for a while as interest. By the time a rebate is mailed to a customer, the company has already earned a lot of interest on that money. This is the same as a loan or the money you put into your savings account. The main difference is that in case of a rebate, you may actually never see the money you lent the company in the first place.
5 easy steps to ensure you get your rebate money
Here are 5 easy steps you can take to make sure you get your rebate money on time.
- Most rebates require cutting the UPC code from the product box. Make sure you want to keep the product before doing that, as stores do not accept returns that have missing UPC labels.
Since most online and retail stores do not accept returns on items where the box does not have a UPC code, make sure you like your purchase before mailing off that rebate form. If you do not like the item your purchased, simply return it and get all your money back.
- Mail in your rebate forms right away using the correct shipping method
Most customers never file a rebate claim, and many people send in rebate forms after they have expired. I have also waited several times before sending a mail-in-rebate, and most of the time it was too late. Send your rebate forms right away and make sure you send them either with a return receipt or a delivery confirmation. Return receipt allows you to get a receipt from the post office stating that the recipient got the mail you sent them, and a delivery confirmation also shows written and official proof that you mailed something which was received by the other person. Any of these two options can help you in cases where you have to start arguing with a company that you did send them those rebate forms.
- Keep a copy of everything.
This may be the single most important thing you can do when filing a rebate claim. Keep copies of everything as many companies are famous for never getting rebate forms or for losing them. If you do not have copies of all your forms and receipts and the company denies ever receiving your form, you are most probably never going to receive any rebate check from that company.
- If you do not get anything in the mail soon, start inquiring.
Many companies have been known to make customers wait for their rebate checks for a long time, hoping that the customers will forget about it and move on. Many customers do forget about their rebate checks until its too late. Try not to be one of those people. I know you are busy, so if you can, mark down some future date on your calendar as a day to start contacting the company and inquiring about your rebate check. Keep a track of all things on your calendar.
- Avoid rebate items altogether
This is the most logical step to take. Avoid items that require a rebate. If a store is selling an item that comes with a $50 mail-in-rebate, chances are there is another store selling the same item at a price that will save you exactly 50 dollars without any rebates and thus a lot of hassle. Shop around. The internet is a valuable tool to find good prices for a lot of things.
How companies are changing their policies regarding rebates
Because of the complications and complaints involved with rebates, many companies are simply trying to eliminate any headaches associated with rebates. Staples is taking an interesting approach to this by allowing people to submit their rebates online through the “Staples Easy Rebates” program. This allows customers to submit everything online instead of mailing stuff, and also helps customers keep an online record of everything submitted. Such online systems let the customers know immediately what extra information is needed before a rebate can be processed, and it also helps the company track down and fix any rebate issues experiences by a customer.
Other companies are taking a different approach by trying their best to eliminate rebates altogether. Dell is planning to end mail-in-rebates in order to further improve its image in front of customers. Similarly, after getting sued, Best Buy announced it will try to curb out mail-in-rebates by 2008. Other companies like OfficeMax have also taken similar steps. This way, a customer does not have to wait for any rebate check to be mailed to them and can save money right away.
More resources that talk about the rebate hassle
In addition to the links mentioned above, following are some resources I found useful in the past, and I think they may help you also in finding out more about the nature of rebates.
- Business Week article titled “The Great Rebate Runaround” - first published on November 23rd, 2005.
- Slate article titled “The Great Rebate Scam” - published on June 30th, 2003.
- A 5 part series written by Lyle Bateman, talking about a rebate scam involving a Creative webcam and Future Shop. The posts are titled “The Rebate Scam” and divided into 5 parts: Part 1, Part 2, Part 3, Part 4 and The finale. The author explains how even though the rebate check was received, it was still a hassle and involved a lot of risks for the end consumer overall. Published from October 24th, 2006 to January 15th, 2007.
- MSN Money article titled “Don’t get ripped off by a rebate ‘deal’.”
I hope that helps. If you have any questions or comments, please let me know or post them here so others can share their opinions also. Thank you for reading.
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( January 22nd, 2007 at 1:36 pm )
I just got a rebate for spending more than $100 in HP ink at Staples… can you imagine, $100? Anyway, I got $15. I did the online thing and it was really strange because I got a postcard saying they could not honor my rebate due to the following reason… and that part was left blank. And then the next day, or the day after, I got the check on another postcard. Cashed it Friday.
However, my rebate, $30 or whatever it was, for that last jump drive I bought still has not arrived, and I purchased that before all that ink. I got an email saying that I’ve submitted everything correctly or something like that from Sandisk but it still says processing on the status when I log in.
And that jump drive I bought before that? Still have not gotten that rebate. I guess it’s good I found the drive and it did not remain lost, otherwise that’s even more money down the drain.
I did find myself avoiding items online after Christmas with all those sales if they said it was the price after a main in rebate. I’m not letting those cloud my jugement anymore, lol.
( January 22nd, 2007 at 3:42 pm )
Yeah, I don’t do rebates at all… Don’t want to fill out the forms or anything. LOL.
( January 22nd, 2007 at 3:44 pm )
Hmm.. well, I actually got my rebate the amount stated. The thing is, they take forever to give it to you.. I had to call in to see what they are up to.
There are a lot of these scams these days. But we can’t resist trying it can we? I guess we have to stop trying our luck….
( January 23rd, 2007 at 8:06 am )
Hmm, maybe I just have awesome luck with rebates because I’ve never run into any problems. *knocks on wood*
( January 23rd, 2007 at 6:55 pm )
Thats quite a lengthy & interesting post…
Isn’t it strange that corporates rely on cheating the customer to earn money.
We dont have rebates in our country (india). I dont think if companies do like this the concept of rebates will even be encouraged. However, In india during shopping season, shops here put up big posters which say “discouts UPTO 50%”, but the max discount they offer is not more than 5%-10%.
( January 24th, 2007 at 1:43 am )
Valerie, that is expensive ink indeed.
Your printer must be printing excellent quality pictures, no? So their online system can get confused also. Good thing you got the money though.
I think many companies take their sweet time before mailing back the rebate money. Sometimes, such companies hire “rebate specialists”, which are companies that simply take contract work to manage rebates for companies with hundreds of thousands of rebate claims. These companies take their time to return rebates, and sometimes you have to inquire further and sometimes even repeatedly to get them to actually send you the rebate. Both jumpdrives were from Sandisk, right? If so, Sandisks’ rebate policy takes a long time to send back rebates. That is good to know.
Yes, avoiding items with rebates altogether is the perfect thing to do. Good for you!
Chau, I prefer avoiding filling out such forms also. They usually ask you a lot of irrelevant questions also, like date of birth and email address.
Vera, that is nice to know. Also, they usually take time it seems, but as long as you get the money back, that’s good. Calling is always the best thing. It’s your money; you have every right to call when you were promised you could invest some money in something and see some of it back. And yes, you are right, it can get hard to resist good deals.
Nicole, heh, lucky you. Please share your secret with us. May be you are shopping with the right companies?
Sawai, thank you. Yes, it is strange indeed. I have seen similar signs also where the “upto” portion of a sale banner is glorified more than the rest of the banner. It would be interesting to see how many stores actually lure customers in like that while only offering 5-10% discounts, like you mentioned.
( January 24th, 2007 at 6:38 am )
Yup, I see the same thing that Sawai does all the time. You hear of sales that say everything is 25% to 75% off but you can only find items that are 25% off. Or seeing the clearance aisle where it says up to $5 but every item is $5.
Anyway, yes, it was a lot of money in ink. I actually bought a combo pack and two single blacks, I think, so four cartridges overall, so it should have been more around $70 I think, so maybe the rebate was if you spent $60 now that I think about it. But the problem with ink is that no matter where you get it, it is the same price, or you only save a few pennies.
But, no, on the jump drives. I bought them both from Tiger Direct, but the first one was a PNY and the second a Sandisk. I’m not sure who I was supposed to get the rebate from for the first, but it was probably PNY. That’s the one where I was in a hurry and mailed an empty envelope before mailing all the stuff LOL, so maybe they figured I’m too stupid to get a rebate…
( January 24th, 2007 at 11:25 am )
That is interesting. I should go and try stores with similar signs and check whether or not they have any prices which are lower than the ones advertised.
Regarding the ink, you are right about ink cartridges costing the same almost everywhere. I used to buy a lot of Lexmark ink cartridges before and they almost always had the same price tag everywhere, both online and in retail stores: $32.95 .
Regarding your rebate, try mailing the envelope with the UPC code again. Usually Tiger Direct rebates are handled by a company they employ: OnRebate. You probably mailed the rebate to them and they are taking long time to process it. If you mailed it directly to PNY, I think it maybe be easier to contact them and get an answer out of them regarding the rebate that you did send out successfully. Judging from different online forums and Google, Tiger Direct has a lot of satisfied customers, but they have an increasing number of customers who never get any rebate money back, ever.
You should increase your rate of contacts with them through the phone or email. So far, that is usually the only way to get a rebate company to send out rebates when they are ignoring their responsibilities.
( January 24th, 2007 at 7:50 pm )
This is a great article. I don’t necessarily think that rebates are a scam, but just an unethical marketing gimmick. A rebate is the same thing as saying, “We’re having a sale. Later. Buy something now and in 6-12 weeks when we have the sale, we’ll give you your money back.”
I agree with most of your points. I had to research rebates for my marketing class, and it is very true that most people do not bother to fill out the rebate forms. However, this also depends on the value of the rebate. If someone is expecting a three hundred dollar rebate, chances are very high that the person will fill out all the rebate forms and jump through all the hoops to get the money. If the rebate is for five bucks, then some people say, “Why bother.” It’s all about opportunity cost.
If I spent an hour filling out the forms, cutting off the UPC, and copying this and that for a ten dollar rebate, then I have lost money because of opportunity cost.
I also really liked your example of long-term cost savings regarding rebates (point #4). This is an excellent point, especially for electronics. A camera that was $400 with a $50 rebate may be $250 by the time the rebate check comes in the mail.
As a side note, I really liked the way Verizon handled their rebates. The rebates were all online, and I could check the status of my rebate at any time. I think I received my rebates after two weeks.
Take care and thanks for the great article.
( January 25th, 2007 at 1:53 pm )
Thanks for the comment. You are right; they can be called an unethical marketing gimmick. I have myself also not mailed in many rebates when I was supposed to get 90 cents back. I also agree with your point about opportunity cost.
Good to know Verizon handles their rebates like that. Customers should be allowed to submit their rebates online also. 2 weeks is a very good time to receive your rebate money back compared to the time it takes for most other companies to mail rebate checks back.
( May 12th, 2007 at 11:19 am )
One of the major rules to remember about rebates, is that it is a “potential” unconfirmed monetary return value based upon original “net” purchase price before tax applications per state or country you live in.
Anybody that tries to work the rebate system must become very informed of the current procedures, the type of rebate being offered, the amount being offered for rebate (is this going to cost more then the product is worth?) and must do enough research to see the track record on rebates received by individuals from the company offering the rebates in the first place.
I do not ever return a rebate for more reasons then what is mentioned in this article and the current responses to said article because when I do shopping, I look at the “original” offered price rather then the rebate price being advertised..
I make purchases based upon this so as to not feel obligated or slighted for a price I was not expecting to fork over in monetary value as the rebate “shuffle” is reminiscent of the card shuffle game one finds on the street corners of cities like NY.. Sometimes you win, sometimes you lose, I for one do not like to gamble my hard earned cash away on such ventures, as the rebate “shuffle game” requires more then my money, it requires my valuable time for which I cannot recoup if I lose..
Stay away from the rebate shuffle unless you want to become a warrior of rebates (I have met a few who do quite well in gambling)
( May 12th, 2007 at 1:14 pm )
James, thank you for visiting and the site and leaving the detailed comment. I am glad that you took the time to do that!
You are right, it indeed is “potential” money and not confirmed/in-the-pocket money. It does take planning and understanding of different things to be good at the rebate game, yes. There are some online forums that deal with rebates, like the SlickDeals Rebate Forums.
The company policies themselves, on their own rebates, play a huge factor as to whether or not one has a greater chance of getting back the promised rebate money.
I like your mentality of making purchases based on the price you actually pay, instead of assessing what you’ll get back. That can allow you to consider the rebate money as a surprise, and if no money comes back, then everything to be normal.
Good points James, I really like your comment. I would love to hear more from you on this and other things.