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InPhonic Responds

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April 25, 2006
We received the following response from InPhonic:

InPhonic Inc. (Wirefly.com)
Office of the President
1010 Wisconsin Ave, NW, suite 600
Washington DC 20007
customerinquiry@inphonic.com

Thanks for the opportunity to respond to customers who have voiced concerns about their cell phone rebates. As you know, InPhonic (NASDAQ: INPC) is a publicly-traded and award-winning e-commerce company that activates over 1 million cell phones a year for Verizon Wireless, Cingular, T-Mobile and Sprint-Nextel -- more than all other online cell phone retailers combined.

Cell phones can be much more complex than most purchases, as they involve handset subsidies, credit applications, carrier approvals, number switching, and rate plan activation. Our goal since our founding has been to make these confusing processes simple for our customers.

Handset subsidies, in particular, are a prominent point of confusion. Simply put, we sell phones for LESS MONEY than we pay for them. We often give them away for free. Our profit only comes after the customer pays his or her bills for six months, when the carrier pays us a commission.

Unfortunately, many people have made an art out of stealing phones from us. They take our free phone offers without any intention of maintaining a new account with the carrier. As a result, we sometimes use rebates as a means of offering value to the customer. Keep your contract, pay your bills each month, and you can submit a rebate for additional cash back.

These offers have been extremely popular -- so popular, in fact, that we frankly became overwhelmed with rebate volume in the last year. This led to some delays and errors in rebate processing, and ultimately to some of the complaints that have been posted on this site. We also have learned that when people have to wait six months to submit a rebate, they are more prone to errors.

As a result, we have made a number of changes designed to improve the process for our customers:

Firstly, we changed our outsourced rebate vendor; we now use a larger processor that is better equipped to cope with the volumes generated by our rapid growth. This has eased the backlog considerably. We also created a web site at www.wireflyrebates.com; the role of this site is to answer frequently asked questions about our rebates, as well as to help customers avoid common mistakes that may cost them a denied application.

Among these mistakes, the most frequent is not sending the rebate with the required billing statement. For our "Customer Loyalty" rebates, customers must wait until they receive an invoice showing the balance paid in full 150 days after activation. Many customers submit copies of an earlier bill. In these cases, we give the customer an additional 30 days to resubmit with a copy of the proper billing statement.

Another common problem is that people submit their rebates after the rebate deadline has passed. In fairness, this requirement is clearly stated and explained on the web site and on the rebate forms.

Many customers whose rebate applications are denied due to a late postmark argue that their submission was actually sent on time. Our rebate company keeps the paperwork as well as the envelopes in which it arrived; therefore, if a customer is certain that a claim was postmarked on time, he or she can contact us at customerinquiry@inphonic.com and we'll request a photocopy of the envelope showing the date of the postmark. In this manner, the process is clear and objective.

If we find that a mistake was made while processing the rebate, we of course make sure that the mistake is corrected. But if, as it happens in the majority of the cases, the postmark proves to be past the submission window, we send the customer the documentation so they can rest assured that they were not the victim of foul play -- and so that they can continue to shop online with confidence.

We thank you for giving us the opportunity to respond, and we look forward to helping you with your wireless needs. Please visit www.wireflyrebates.com for more rebate-related information.

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