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

Common sense

[dauthur]

"41% of shoppers never send in their rebates."

Of course. It's too much hassle to sign a receipt and mail it to the company and wait a few weeks, in which they'll most likely forget all about the whole thing, and get a surprize $30 in the mail. Laziness costs more than cigarettes these days.

Re:Common sense

[blahplusplus]

Well considering the amount on peoples plates in modern life, remembering to send in a rebate to save $20, $30 when they have so much to consider doesn't seem unreasonable. The fact is offering rebates should be illegal because the reason they are offered is because they are burdening the customer with after sale Bullshit and schemes that amount to con-artistry.

The fact is they pump up the price and offer the rebate, and the rebate usually only brings the price of the item to 'market' value for someone who spends time looking for the lowest prices. Rebates are bait and switch, no bones about it.

I've sent in rebates I have not recieved. I also had rebates that "expire" by the company claiming that it "didn't get it on time" a month after the fact, when they should have recieved it within two days after mailing it.

There are actually 'expiry schemes' where they have expirations and the stores offering them continue to advertise 'rebates' knowing that the expiry will keep them from having to put out money, if they even do it at all.

The fact is, if you can't sell the item for the rebated price outright, you have no right to even offer the rebate in the first place.

Rebates should be illegal or legislated at the time of purchase (and advertisment of the rebate) the customer who bought it then does not have to worry about expiry.

Re:Common sense

[wk633]

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.

I get 90% of my rebates back, but those that I don't- I really have no recourse, and it's a ripoff.

Just ban rebates

[Anonymous Coward]

Rebates serve 3 purposes. One is to take advantage of people who don't send them in. Another is to trick people by offering rebates that expire too soon for people to actually get them (see Tiger Direct - rebates often expire in a few days). And lastly, in a corporate environment I've heard of _people_ getting rebates for corporate purchases - this amounts to a way of bribing purchasers or other such corruption. If you want to offer a discount, just reduce the price. There's no ethically decent reason for rebates.

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.

Glad I don't have to deal with that.

[eddy]

I'm glad rebates of that kind doesn't exist over here. Here rebates are pretty much unheard of besides for groceries, and those are handled directly at the checkout, no mail-that-in-later stuff.

Doesn't take a genius to figure out that all that handling just makes it more expensive for the customers in the end.

I deliberately don't consider rebates when buying

[rollingcalf]

The article said 41% of consumers don't send in the rebate paperwork. Well I send in close to 100% of mine, and I fail to get the checks for about 41% of them. So they will maintain their 41% non-payment rate one way or another.

Now I stop thinking about rebates before purchasing and only buy based on the full price. If one thing is plain $50 and a similar product is $60 with a $20 rebate, I'll buy the $50 one.

If I do buy something with a rebate, after buying I'll send in the papers and hope to receive the money and if I get it, it's a bonus. But I won't factor it into my purchase decision because I don't trust that I'll actually get it.

The State Goverments likes it that way

[Anonymous Coward]

They really have no incentive to change it. Since the rebates NEVER refund the taxes, the states get a extra windfall in taxes.

It just another conspiracy to collect more taxes.

Re:I deliberately don't consider rebates when buyi

[digitalhermit]

I had similar problems with some retailers.
From: http://www.miami.com/mld/miamiherald/8138630.htm

After being extremely diligent in filling out the paperwork and making sure that I adhered to all the requirements of the offer, my rebate was still denied by Maxtor (a digital storage manufacturer) because the paperwork ''wasn't received in time.'' If true, it would have meant that it took the postal service more than two weeks to move a letter about 20 miles from my home to the Miami rebate center. It was only after contacting the Better Business Bureau that was I able to get my request honored.

After doing an informal poll of some of my co-workers and associates, many of whom work with information technology, I was surprised to learn that almost all of them had had rebate requests denied. Unfortunately, many didn't send their requests via certified mail because the rebate amounts, often $5 to $25, didn't seem to warrant it.

After my experiences, I would suggest a few steps:

Read the rebate requests thoroughly. Many times, they require the actual register receipt and not a copy. Some will require that the rebate item is circled on the receipt even if it's the only item listed.

Keep physical and digital copies of your paperwork and receipts, including the envelope used to send the forms. This makes it easier to forward copies to the state consumer affairs department, Attorney General and the Better Business Bureau.

Submit the paperwork immediately. Retailers count on customers to lose receipts or forget to request the rebate.

Use certified mail to prevent the convenient excuse of ''late mail.''

If you're denied your rebate after complying with the offer, make sure to send your information to your state Attorney General's office. It can't take up your case directly, but it can help establish a pattern of activity.

Do not forget those who live outside the USA...

[InvalidError]

1) Mailing the claim can cost as much as $10 with reception confirmation and other such options... make that $2 for plain enveloppe and international postal charges.
2) Cashing the refund can cost over $5 for people without USA-funds banking accounts.
3) Most rebates I have seen have a disclaimer that says they will be honoured at the manufacturer's sole discretion.

Because of this, I only buy into rebates when the base price suits me - FutureShop having a $110 CDN Audigy2 sale plus $45 mail-in is nice when the next lowest regular price around is $115 - this is how I discovered that USA rebates cost about $10 to claim... so that $45 rebate barely covered taxes, postage and cash-in costs so the card cost me about $110 net.

All in all, rebates are annoying and doubly so when they are in some other funds, not worth bothering with if under $20 - I prefer waiting a little longer until the "rebate" price becomes the regular price since rebates usually mean pending price adjustments and new models.

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.

This is too familiar

[bblazer]

About 6 years ago I did a stint as a low level manager at a CompUSA in the northwest while I was between jobs. Rebates were a constant thorn in my side. Every weekend a flyer hit the paper offering about 10 different items that were "free after rebate." People would line up out front waiting for the doors to open. Then they would rush in and grab up all of our stock of that item. Then the fun began. Those people who came in after the rush would get belligerent that we didn't have any more and start big scenes in the store. Or, we wouldn't have enough rebate forms for everyone. I was also always dealing with customers that never got their rebate, or got a card telling them that they didn't handle the process correctly and were not going to receive their money. What most seem to not understand is that 99% of the rebates that were offered were given buy the manufacturer, not CompUSA. Our sales agreements forced us to offer these rebates, then we were forced to deal with inventory and coupon shortages caused by the vendor, and the customers that never got their check. VERY, VERY, rarely did CompUSA offer their own rebate. But since we were the retailer those with problems came to use for resolution. I felt bad for them that I was not able to help. Corporate policy forbade us from giving them anything as compensation (the thought was that WE did not own them, the vendor did, so why does it have to come off our bottom line). My thought is that we possibly made money off the transaction, so we should do something. But in the end it was a lose-lose situation.

Here's my beef

[tkrotchko]

"What you mean is that fraudulantly offering an unredeemable rebate should be illegal, which it already is."

Here's my beef.

Rebates in some theoretical sense are fine.

There's two things I have a problem with, one of them is philosophical, one of them is practical. Lets start with the practical.

I have in several cases, sent in rebates. I'm usually very careful. I have in several cases (a) not received a response ever or (b) The rebate fulfillment house claims I didn't send in enough paperwork (and well past the deadline for submission.

I have no recourse in these situations. I'm just out the money. And what's worse, nobody has an incentive to make this right, because the company is simply out money if its correct, and they get more money if I'm screwed.

On a more philosophical level, I have a beef with rebates. Lets go through this:

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.

But even if you disagree with my philosophical conclusion, how do you deal with the practical aspect of a system that has no ability to be corrected? Its like playing the lotto as to whether that rebate actually comes.

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.

Rebates are part of a flexible pricing plan

[PenguinOpus]

I disagree with several of the posters here who say that rebates ought to be illegal and offer no value other than to return products to market value.

If the rebate is not paid, then that is fraud, otherwise:

Rebates are the equivalent of a flexible pricing plan that allow those people that care enough about the $20 to go through the hassle of completing the transaction. At this point most consumers are fully aware of the annoyance level and factor that in to their buying decision.

Poor/Parsimonious people who really need the product will follow through, get the discount and purchase the product. The rest will do so at some much lower hit rate (well below 50%).

This means that the price people pay varies based on need.

The result is that more people are able to buy the product so it can be manufactured and sold in higher volume (and therefore possibly at lower cost).

Regarding the cost benefit of rebates, I can state definitively that the best rebate deals at Fry's are usually selling products below cost of manufacture (eg 250G HDDs for $99, network hubs for $0). Sure, some products use rebates to return prices to the discounted price of their competitors but smart consumers can do the math, realize that, and decide if its worth the hassle.

Even without rebates, the airline industries pricing model, convenience-store pricing, and apparel industry off-season discounts are all examples of flexible pricing to capture different consumers at different times with exactly the same product.

As a lazy consumer, I wish everything were flat priced so I would never have to worry about whether I'm getting "screwed" by paying more than the best (or even average) price.
Legislating flat-pricing would be nice, but I believe it would end up producing higher-priced products overall.

OfficeMax is a serial rebate abuser.

[FirstOne]

Officemax is a serial rebate abuser. They put all their rebate coupons in a little book with very small writing.

What you're unlikely to notice, are the absurd submission post mark dates. Often less than one a week after purchase. That's hardly time to even test the newly purchased equipment. To return a defective item, the packaging must be intact which precludes submitting the rebate paperwork on time. So they take advantage of the customers inattentiveness/work load to scam them out of their rebates.

Note: They'll often advertise the same item (with similar rebate) every month or so.

I love rebates...

[MadAnthony02]

First of all, I have a problem with banning anything - I think consumers should be able to evaluate if they like rebates or not, and purchase accordingly. I happen to like rebates.

If you are willing to take the time to fill them out and follow up when necessary, rebates can be good. I've gotten over $8,000 in MIR since I started keeping track (the excel spreadsheet is here.

Rebates can be good in a couple ways. First of all, if you stack a rebate with a coupon with a minimum spending limit - ie a $20 off $100 coupon - you get to use the coupon and send for the rebate. Secondly, stores also offer FAR (free after rebate) stuff, and they aren't just going to hand you free stuff - but they will after rebates. Thirdly, sometimes through loopholes you can make out - I recently got paid $45 by Microsoft for buying OneNote - it was $55 from Amazon with a $100 rebate from Microsoft.

Also, if you are having trouble with a rebate, the rebate tracking forum on Fatwallet is a great resource - you can learn which companies are good and bad about paying in a timely manner, and there is a sticky thread with contact info for most major rebate processors.

Re:Rebates should be illegal

[M. Piedlourd]

They (the gov) don't even have to outlaw rebates. Just make it false advertising to put prices in ads or store displays with the rebate amount already subtracted.

We have a law in Connecticut that deals with this. If a retailer advertises a price for a product, they must accept that price at the point of sale, whether or not that price includes in small print "after rebate." So if Crazy Bob's Komputer Outlet wants to sell RAM chips for "$1.99!!!*" they have to take $1.99 at the register. If they want to offer a mail-in rebate, they have to advertise the product as "$91.99 with a $90 mail-in rebate!!!!" We also have a litigious Attorney General who is pretty zealous about enforcing this law, so we find that it accomplishes its purpose.

* after rebate