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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.
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
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
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!
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
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.
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'.