FTC Tells CompUSA to Pay Up QPS Rebates

prostoalex writes "FTC told CompUSA they will have to keep their word on paying out rebates for QPS equipment purchased at CompUSA. QPS is currently bankrupt, according to the article, although it's not clear whether they went out of business before or after the promised 6-8 weeks deadline came. CBS MarketWatch says this should spur rebate re-evaluation among other electronic retailers. The habit of offering rebate incentives seems be especially notorious in the consumer electronics and computer hardware industries as a third of shoppers for such goods bought a product with a rebate offered. Reason for such popularity? 41% of shoppers never send in their rebates."

Comments

Retailers also like rebates because...

[GLowder]

Retailers generally get to report earnings based on dollars brought in at the register, _then_ they pay out rebates. So even if 100% of customers send in their 50% off rebates, ACME gets to report $100,000 in widget sales, when really they only sold $50,000 in widgets.

You can win sometimes

[fmaxwell]

I read the directions and send them in religiously. Got a card back from Belkin saying I hadn't sent in 'some required information'. Not enough info on the card to tell me what information, or what rebate, or when. So what the hell do I do? Stop buying Belkin is about all I can do.

What I did in a similar situation was phone and ask what information was missing. The person said that she could not tell me. I told her that I wanted them to return everything that I sent. She smugly informed me that the rebate says that they can keep everything I send. No, I told her, it does not. It says that they may keep it if they pay the rebate. Since they were not paying the rebate, I wanted it back. Suddenly a supervisor got on the line and said that he was approving payment. I had the check in under a week.

Staples Rebates

[shancock]

If we must have rebates, I have to admit that Staples is the way they should go. You get instant online verification of your rebate, no waiting 6 weeks to get a postcard that states you supplied incorrect information.

The rebates at Stapes are handled online very quickly and you have a tracking number to follow. Everything is upfront and out in the open.

I had one item that was disallowed this past Christmas and since it was online and there was recourse (email), the problem was cleared up within days. I had records on my computer and everything worked. Very nice.

Re:Here's my beef

[ScentCone]

Merchant: Buy this widget for $2, and I'll give you $1 back in the mail.

Me: Why not just sell it to me for $1?

Merchant: Because I'm hoping you'll forget to send it in, and I won't have to pay you that $1.

You see? Its almost fraud but not quite. So from that viewpoint, I understand why people think it should be illegal to offer rebates.

OK, reality check here. In most cases it goes a lot more like this:

Manufacturer: "Thanks for ordering a pile of Acme Widgets, Mr. Big Box Retailer! Here's your shipment, and an invoice. You'll notice that the invoice says 'Net Due 60 Days, 2% Net 20' "

Retailer (to self): "Better pay that bill in 20 days so that we can get the extra 2% discount"

[retailers completely live or die on slim margins when the products are commodities like computer hardware, etc., so 2% is a lot over time]

Retailer (to self, 30 days later): "Gosh, I'm glad I've sold half of my Acme Widget inventory, but the rest is moving slowly, and I've got cash tied up in that pile of merchandise. Hmmm."

Retailer (to Acme Widgets territorial sales rep): "Help!"

Sales Rep: "Here's a pile of rebate coupons. Your customers will get $20 back from us if they buy something out of your stock, but they've got to do it this month."

[the sales rep knows that he'll only earn commission on another order from Big Box if he helps Big Box cycle inventory]

Retailer: "Dear customers: you can get a $20 rebate on this thing that we've already paid for, but that's between you and the manufacturer."

So, you get the idea. With some exceptions, the retailer isn't even involved, other at the marketing level. There are a million variations on this theme, and many things like this are planned in advance, rather than being treatment for slow-moving products. But a key concept is that the retailer often is dealing with the vendor at essentially normal prices and margins, and the rebate is used to move the consumer into action while the vendor (not the retailer) absorbs the profit hit. As retailers improve their IT infrastructure, you're seeing the coupons show up as direct-on-your-receipt printouts, and redemption is even flowing back through a service provided by the retailer. But it takes a big company to make all of that work smoothly, so mom-and-pop retailers usually just hand you the printed coupon from the distributer.

This can, of course, turn slightly sleazy, as cheesy retailers and their suppliers gin up the appearance of stock liquidation/incentives just so they can float on your money for a couple of months. That low-rent behavior can be avoided by not patronizing those distribution channels, and by rewarding quicker-acting rebate programs with your business.

how do you deal with the practical aspect of a system that has no ability to be corrected

The same way you'd deal with a supplier/retailer that won't address the fact that they sold you a defective product, or over charged your credit card, etc. If they have crappy customer service, make sure that you, your frieds, and all of your business contacts no longer do business with them. Places like Slashdot are fantastic forums for alerting people to unethical (or, ideally, stellar) retailers. Hence my praise of Costco, for example - their rebates are quick and easy.