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Are Rebates Scandalous?
theodp asks: "Motley Fool offers a dead-on take on the computer mail-in rebate fulfillment process--Once I receive your 'claim,' I will begin to 'process' it. Assuming that you filled out all the information correctly, and assuming nothing is missing, and assuming your claim doesn't get lost somehow, and if you call or write a few times to check on your claim's status, then I will mail your check within 10 to 12 weeks. Maybe. Or maybe it'll be four to six months. Or never." What are your thoughts on rebates, and have any of you noticed who, at least in the computing industry, is more trustworthy with rebates than others?
Update by J :
Here's the
short version
of the article.
At times I forget to send them in. What should happen is the selling company, should take it upon themselves to handle the rebate for you in store, instead of you dealing with the nonsense paper trail of it.
They're buying your personal information so they can either use it to fill your mailbox with their junk or everyone's junk. There's no other reason for them not to do rebates at the POS/cash register.
Regarding computer-related rebates, they are even worse. I bought some CDR media that was "$2 after $10 rebate". I had a weak moment and figured it was worth the $10. The Best Buy receipt offered a way to file your rebate request online. I thought, great! Mailing rebate requests is sure lame!
So I go to punch in the rebate information and am presented with a page that I can print and USPS mail in.
Completely worthless, except now some additinoal "rebate processor" company also has my information.
They send you a check in return for the marketing information that you provide them. If they don't send a check, complain until they do. How is this a scandal, again?
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Curiously enough, these are much the same set of reasons that a rebate is bad for the consumer.
There is one other bad thing about rebates from a consumer's point of view: you pay sales tax on the non-discounted price of the item.
www.eFax.com are spammers
Write another letter back and CC it to the FTC and your Senator, explaining that barcode means barcode, and if they don't send the rebate, more politicians might be hearing about corporate rebate scams than just your Senator.
Enron was a tasty snack, and chewing up some companies to win some popular votes appeals to a great many politicians.
If tits were wings it'd be flying around.
HINT to the wise:
Tiger Direct, fine store otherwise, is a complete scam on rebates, from my findings.
Every rebate offer wants "a copy of the reciept".
Included in the shipments from Tiger, you get a "Packing Slip".
On 5 different occasions, out of 5 tries, my rebates have come back as a postcard, "sorry, you didn't send a reciept.
I called Tiger. They said my e-mail confirmation letter was my reciept. Print that, and go.
Tried that 3 times. Included both the e-mail "reciept" and the "packing slip".
3 failures.
God, I'm a slow learner.
It's a big-assed scam. Tiger is otherwise a fine company to work with, just realize that the price you pay is the price you pay, and that rebates are a big fat lie.
Many posts correctly point out that these discounts are designed so that many who intend to send them in never bother/ succeed. But there is actually a more subtle reason as well; the same reason that supermarkets use coupons (as opposed to just lowering the price).
That reason is price differentiation. If the company charges a high price, they sell few units at a high margin; a low price means more units a lower margin. By introducing these coupon schemes, they can charge different prices for the same product. Price-sensitive customers go through the trouble of filling in the coupons, insensitive ones don't. It is the best of both worlds!
Another example of price differentiation is university tuition. There it is called "financial aid" - a scheme clearly designed to make everyone pay exactly what they can afford (note: I am not saying that there is something wrong with financial aid; I am just pointing out that it is very much in the financial interest of the universities).
Tor
I recently bought some equipment at CompUSA and only when I got to the register I realized that the advertized price was after the mail-in rebate ... in other words I had to pay more than I thought. I figured though that at that point I'd spent so long chosing that I'd go ahead and make the purchase anyway. It turned out that I had about $30 of rebate coupons. When I got home I started filling in the coupons, but stopped to think about it before mailing them in. I came to a startling conclusion, which was that I would rather let them keep the $30 and stay off the mailing lists. The amount of aggravation that having my name on potentially countless mailing lists and receiving catalogue after catalogue for perhaps years on end made it a better deal to give up the money. Of course if someone said 'pay me $30 or I'll put you on a bunch of mailing lists' I sue them for extortion. But based purely on the merit of the two cases, without the moral question of which decision results in the best social consequence, I figured that staying off a bunch of mailing lists is probably worth about $30 bucks to me.
... in the future when someone asks for my address, I shall consider first: are they giving me something in return that I think is worth about $30. If not I shall decline to give my address.
That's rather enlightening information
As much of a scam rebates appear to be, at least in most cases you have a chance to develop an inkling of the crap you're getting yourself into prior to buying the product.
But here's the scam: Products that are advertised in ways that do not make the fact part of the "deal" includes a rebate. For example: products listed as purchase price minus rebate with insufficient indication of the rebate figured into the price. Even worse (and this pissed me of in a major way): I bought tax software a year ago that included "free" state income tax filing software. After I had purchased the original bundle, I learned that I actually had to spend more money to buy the state software and then wait 6 f ucking months for a rebate check to arrive.
A total fuc king scam. That should be illegal.
What the hell is the point of having instant rebates instead of just lowering the price?
;) Trust me (and who wouldn't?), its what I have done for a living for around 20 years now.
It called Marketing. As the resident evil capitalist, please allow me to explain...
1. They can be used to 'not' lower the price for price matching policies. "Yea, you bought it last week but the price is still $100, we just have a rebate. We can't give you the rebate if you bought then."
2. They can be used to make people think that the factory is giving us this money, its not that we are overcharging you the rest of the time. "Its $100, before a $50 rebate, but we would lose money if we sold it for $50" Really, Im not making it up. I get paid for this stuff.
3. Sense of urgency. Its for a limited time only. This is true for all sales, but with rebates, the message, and response is stronger. "act now or miss out".
4. Convenience. Rebates are dubious at best, but with an 'instant rebate' you know you can't get ripped off. So its a better value, because there is no risk. Even though it IS the same as reducing the price, it is called "transfering the risk" to the seller, instead of to you. It works.
5. Its a different kind of sale. All sales are good. Very often, an instant rebate is used on NEW items at their introductory price. IE: This item is $150 with a $50 instant rebate. After the rebate is gone, we put it on sale for $100.
Its all marketing, thats all. The above may not make sense to some of you. Good. Thats the idea. Many of you will smugly say that the above is stupid. Thats good, too. The more 'stupid' you think these sales tricks are, the more likely you are to fall for them. I'm not making it up either, it REALLY does work that way. But that is why they (we) do instant rebates: Because it works very very well, especially for quazi impulse purchases.
Remember boys and girls, you do NOT have to be evil to be in Marketing, but it helps.
Tequila: It's not just for breakfast anymore!
Rebates used to be a way for a retailer to sell something for list price, with the manufacturer kicking back some moolah separately. That way, the retailer keeps their cash flow. So why do gateway and dell do rebates? If the purchase is direct from the manufacturer, then a rebate is just a short-term loan to a sleazebag company, counting on your forgetting to ask for your money back! -Chuck
---- Yow! ----
A marketing friend of mine had another point to add .. rebates give the seller a two tier customer base: Rich customers will pay the higher price and not bother with the rebate. Poorer customers will buy the product and use the rebate, but you still get the sale. It's a way of extracting the most possible money out of a mixed customer base.
Another thing I don't see people addressing is the topic of tax.
When you buy an item for $1,000 (which includes a $100 rebate), you're actually paying the tax on the $1,000, not on $900.
So, make sure you factor in the tax factor before committing to a rebate sale. Actually better yet, everyone should just boycott any and ALL items with rebates. It's all just a scam. If they wanted to give you the money they would've discounted it at the counter.
eTrade SUCKS
Also, how to prevent information from being sold ? You can't, but how do you deal with potential SPAM ? Each company gets their own rebate address. Also the only company that really seems to sell information is Staples.
I've gone out now 3 years now, and spent over 1500 and gotten 1200 of it back. (and I DO track my rebates).
What people are probably doing (not doing ?) is following the instructions EXACTLY so of course they get screwed.
The only products I won't buy now are Mad Dog (they keep screwing my rebates claiming a problem).
UPS Sucks
I used to work as a temp for some faceless "processing center" that handled claim verification/approval. They told us flat-out that they wanted EVERY form filled out EXCATLY right, and that it be PERFECTLY legible, otherwise the claim be denied.
They even gave us a little checklist for things to look for (ie: 9's that look like 4's, copies of receipts (they wanted the originals), forms filled in pencil or red ink (on the form in fine print it said: only use black or blue ink), etc) and other little technicalities that made it so that the people who sent them in would not get their money.
It really sucked because the forms themselves were from CD spindle packs, and so they were coated with a layer of like wax or plastic or something that made it very difficult for ink to stay on. sometimes people who would write with a ball point pen would leave only the "engraved" writing on the form, because the ink would smudge onto the inside of the envelope, and so those would obviously get put into the DENIED pile.
I guess they were afraid of a class-action lawsuit or something, because forms that had the ink smudged off had to be 'destroyed' and the only record of it was a little slip that had the person's name/address from the envelope they sent it in and the reason why it was denied (illegible) that way, no one (like a lawyer) takes a second look at the forms and says "hey, look! if you angle it just right, you can see what they wrote!"
needless to say, I am now very careful not to commit the same mistakes when I submit rebates!
So what you're telling us is that over the past 3 years you have *loaned* several companies $1200, interest free.. and don't have a problem with that?
No. I think he was trying to say, in return for loaning those companies $1200, he has received discounts on goods and services.
Just suppose that he spent all of his money in year 1, and he could get a rate of 4.00% a month on this money, had he kept it:
Nominal Rate of Return: 4.00%
Investment Duration (Years): 3 years
Compounding Frequency: Monthly
Compounded Rate of Return: 12.73%
$1200 * 12.73% = $152.76 opportunity cost.
He obviously thought that $152.76 + $1500-$1200 = $452.76, was worth $1500 worth of goods and services.
Perhaps someone could explain why this is tolerated [by consumers], but it does seem rather strange indeed.
Either it's "In order to purchase something here, you need to give us a $200 loan for 3 months" (the exact opposite of interest-free-credit, which is what most shops use)
Or, it's "Here's a computer for $1200, and by the way, we're lying about that price" which should certainly have the retailer shut-down by trading standards. The evidence in this article certainly indicates that they have little intention of paying this money back (what's the interest rate on a borrower who defaults on 30% of loans?)
If an advert says $1200 (inc rebate), I think the correct reponse should be " you can fsck off, and I'll choose a more reputable place to buy ". Does that sound reasonable to anyone?
My first ever post WOO HOO! =) Ok, I have been using rebates for many many years. I have about a 99% success rate. The only one I lost was a $50 rebate for a tape drive. When I called about it, it sounded like two guys running a business out of their garage. They claim it was lost of course. Ok, So I use to just throw everything in an envelope and send it on its way. That was back when I had only 1 or 2 pending rebates. Then, after the tape drive ordeal, I started keeping copies. Actually had to call a few companies when I didn't get a rebate. It's funny, every time I ever had to call they ALWAYS said the check was ALREADY mailed and I did recieved the check within two to three days of calling (and the postmark date was the day or day after I called). Then the rebates got too many to deal with manually. So I set up an asset account with Quicken to track exactly how much $$ I was owed in rebates. It also allowed to to quickly see which rebates were overdue. So now I have a pretty good system. I scan everything I send. Everything is taped to one sheet of paper with annotations indicating all the requirements. It's been pretty good. Now the rules have changed. I got some pretty substantial rebates from CompUSA and some pretty small ones. I glanced at a random rebate for that I received and everything looked normal. Then a few days later I went to fill them all out. The BIG rebates ($70, $100) had a requirement that the prbate be postmaked the NEXT DAY (that is about 4 days from when I purchased the items!!!). The smaller rebates were the normal 'postmarked within 30 days of purchase'. The big ones were withing the SAME WEEK!! Not many people rush home to fill out their rebates. They want to play with their new router or hard drive (which may take 4 days for some people). So, yet another way for the companies to deny your rebate. What's next 'Must be postmarked on a Monday before noon or Thusday after the post office is closed'.