You can't believe your luck. While trolling Best Buy for a new computer package, you found a Compaq system with color printer, flat-screen monitor and plenty of memory. Best of all, it comes with three mail-in rebates, shaving $250 off the sales price.
Six weeks later, you're happily pecking away at the keyboard, but only the Compaq rebate has shown up. What about that $100 from the monitor and printer purchases? Grumbling to yourself, you dial the 800 number listed on the second rebate form.
Welcome to the dicey world of rebates. With mail-in rebates offered on everything from yogurt to power saws, many consumers, understandably, consider them an incentive for choosing one product over another -- sort of a time-delayed discount. But along with the mushrooming of rebate offers comes another feature: frustrated buyers chasing hard-earned discounts that have increasingly come to seem more like long-shot Lotto ticets.
How It Should Work
Theoretically, rebates are a good deal for both consumers and manufacturers. Consumers get a substantial discount off the retail price; manufacturers get publicity, increased market share, and demographic information on buyers that they can use in future marketing campaigns.
Ideally, you read about an offer in your local paper for a product you were considering buying anyway. You head down to the store, purchase the item and pick up rebate forms and two receipts -- one to send away with the paperwork.
You mail everything in to a "fulfillment house," a company which collects rebate forms and proofs of purchase and tells the manufacturer what they owe. The manufacturer pays the fulfillment company, which in turn pays the consumer. A couple of weeks (or months, depending on the offer) later, your mailbox contains a nice check.
Sometimes it does work this way.
Marcia Layton Turner has collected rebates on everything from Pepsi to a paper shredder, with nary a problem. But glitches can arise along the way: rejection letters stating that you haven't submitted the proper UPC code; claims that the item you bought wasn't included in the rebate offer or that the time to submit forms has expired; a check that never arrives or arrives three months late.
It's estimated that 60% of rebates are never honored -- 40% of consumers don't apply and another 20% apply but aren't paid, according to Consumers Union Senior Attorney Gail Hillebrand.
The Federal Trade Commission, which monitors unfair trade practices, reports that rebate complaints rose from 1100 in 2003 to 1900 in 2004. The FTC has gone after such well-known brands as Bumble Bee Seafoods, America Online and Office Depot. Clearly, "rebate rage" is on the rise.
ConsumerAffairs.com received 914 complaints about rebates in 2005, 838 in 2004 and 786 in 2003.
Although complaints are up, so is rebate use, according to the NPD Group, a sales and marketing information firm based in Port Washington, New York. Their recent survey showed that nearly a third of U.S. consumers have purchased a product with a rebate during the past six months.
Diana Burrell is nobody's fool -- she once ran a rebate program for a consumer packaged-goods company. But when she recently purchased a Cuisinart food processor because of the lure of money back plus free kitchen accessories, Burrell never saw the check or promised cake pan and disk holder.
"I was careful to follow directions and send the form in on time. But when the check didn't arrive and I checked online for the status of my rebate, I found that the claim was rejected because I supposedly purchased the item during a non-rebate period," she recalls.
Burrell didn't stop there, writing to the manufacturer and explaining that she used to work for a rebate program. When she got a form letter back reiterating that her time frame was wrong, Burrell decided to go straight for the president of the company. Stay tuned.
Quinn Warnick, who teaches at Iowa State University, found a Dell system offering a $150.00 rebate. After waiting 10 weeks, he got a postcard stating that his purchase was ineligible for the rebate requested. His sin: buying the system without the monitor.
"Dell's website didn't state that you had to buy the whole system to get the rebate," said Warnick. "I clicked on the $150 Rebate Offer link, removed the monitor from the purchase, and paid for itthe final payment screen even reminded me that I would be getting the rebate." Warnick faults the customer service provider he spoke with for failing to find the problem, and notes that this experience tainted his opinion of the company.
Computer purchases are an unusually rich source of rebate problems. Jena Ball recently bought a computer which malfunctioned. "When I brought it back, the retailer kept it for more than a week, and by then the rebate date had passed. Make sure the retailer gets your rebates, especially if they caused your rebate submission to be late," advises Ball.
Diane Benson Harrington got caught up in a UPC Code trap. "I bought a package of three zip disks for my computer, and included one of the codes with my rebate coupon, together with the receipt. They sent me a note saying they were more than happy to have me resubmit the data with the right UPC code. I had sent in the code for the whole package, when what they wanted was the code from individual items."
Even boxes can be crucial.
"Last spring I bought a new laptop while visiting family out of state," said Deborah Brauser. "I didn't want to worry about the big box while flying back, and left it at my Grandma's house. When I got home, I found I needed to cut out parts of the box and send them in. But my Grandma had thrown it out! I sent in all three rebates, and got money back on two, even though I was missing box parts. One rejected my request," Brauser remembers.
Some merchants are more flexible than others, so don't be afraid to ask for a perk you may have just missed. Beverly Burmeier bought a new printer on December 30, to get the tax break for the current year. The next week, Office Depot offered a $30 gift card with the purchase of her model. Burmeier returned the printer and bought it anew, snagging a gift card.
Inside the Manufacturer's Mind
Pierce Pelouze can shed light on what manufacturers are thinking when they dream up rebate tortures. Pelouze, past Chairman of the Board at the Promotion Marketing Association and former VP of Promotion at the Campbell Soup Company, now runs his own marketing company.
"Rebates can have a definite short-term impact on sales and image. Consumers understand price reductions, which is in essence what rebates do," he said.
Pelouze sees no end to the rebate craze: "As long as there is strategic sense in having one as part of a marketing effort, manufacturers will continue to use rebates. The challenge is to ensure that the terms and structure of their offer are clearly communicated to the consumer and the rebates are fulfilled on a prompt and complete basis."
Southern Methodist University's Marketing Department Chair, Daniel J. Howard, is less sanguine on what rebates do for manufacturers.
"Rebates are disproportionately attractive to a certain type of consumer -- the 'deal prone,' Howard notes. "Lots of marketing tools, like coupons, appeal to this consumer, but especially rebates, because often you're giving people a significant amount of money back. But this segment of the population is the least brand-loyal, since manufacturers want to gain new brand customers, and rebates don't accomplish this."
Anne Brumbaugh, Assistant Professor of Marketing at Wake Forest University's Babcock Graduate School of Management, mentions three types of consumers who treat rebates differently.
"First are folks who don't 'fall for' them because they know they will be difficult to fulfill. If they do apply for the rebate, they consider it a bonus. Second are folks who make their decision based on the discounted price but never apply because they forget or can't be bothered. These are manufacturers' favorite consumers because the offer increases demand but manufacturers don't have to take the hit on price. Third are folks who decide based on the discounted price and apply for the rebate. Unfortunately these folks don't always read the fine print or follow directions completely and are occasionally disappointed to find they will not receive the rebate," Brumbaugh said.
She emphasizes that "with a rebate the consumer is asking for a significant discount. Manufacturers will make it as difficult as possible for them to receive this discount."
For the persistent, Brumbaugh offers tips:
• Before you purchase an item based on a post-rebate price, ask if you are really going to fulfill all the requirements. If not, ask if you really want that item at full price. If so, purchase and enjoy it. If not, pass it up.
• Read the fine print of the rebate offer before you purchase the item. Make sure you comply with all requirements. Are you within the required time frame? Is the item you're considering listed specifically on the rebate offer (not a model or variation thereof)? Do you have all the paperwork necessary (UPC, receipt, rebate form, etc.) to apply? Will you mail it in on time?
"Plain Old Theft"
Some consumer advocates take issue with Brumbaugh and Howard. "It's no wonder once-respectable companies engage in this disgraceful and dishonest fleecing of the consumer," said ConsumerAffairs.com's Jim Hood. "Look what they're teaching in universities!"
"When you have faculty members from respected universities saying that consumers are 'asking for' a discount when in fact it is the merchant who is offering it as an enticement to buy and then implying that only gullible rubes -- what Howard apparently means with his condescending "deal-prone" label -- fall for the offer, it's no wonder freshly-minted MBAs who have never done an honest day's work in their lives think it's fine to rob consumers of their hard-earned and much-needed money."
Failure to fulfill rebate promises should be labeled for what it is -- theft, Hood said. "Some enterprising Attorney General needs to send a few marketing executives to prison," Hood insisted. "Where is the bunko squad when you need it?"
More Tips for Success
The more vocal consumer advocates' comments notwithstanding, manufacturers and merchants will continue to offer rebates and many consumers will continue to believe they are dealing with honest retailers.
• When possible, shop at stores which have application forms on hand and providing duplicate cash register receipts. Best Buy, Circuit City, Lowes and Costco are among these.
• Apply promptly. Many rebate offers are on a tight time frame after purchase. Don't leave forms on your desk for four weeks.
• When you mail in forms, ask for delivery confirmation from the post office. Keep a photocopy of everything you send in.
• Mark the date on a calendar when the rebate should be received and jot down a toll-free number and mailing address just in case it doesn't show up on time, says FTC attorney Leslie Fair.
• If your mailbox remains empty, try calling the manufacturer directly, says Burrell. They want to keep good relations with customers and may intercede for you to make sure you get your rebate.
• When you get the check, cash it promptly.
• Most importantly, know yourself. Are you detail-oriented enough to follow the money? Will this exercise be more trouble than it's worth? Research has shown that when there's more money at stake, consumers are more willing to spend time and energy chasing that discount.
"Only super-organized, highly competitive consumers should count on getting their rebate," said Hood. "It's a battle of wits between you, the manufacturer and a faceless fulfillment company. Don't play the game if you're not ready to fight for the trophy."
Rebate: Discount or Lotto Ticket...