Misc. Ramblings

I recently talked about how I try to solve the asymmetrical information problem by using a third-party expert called the Better Business Bureau. Today I want to talk about mail-in rebates.

A lot of businesses use mail-in rebates as a way of getting you to buy stuff you wouldn't otherwise. The way it's supposed to work is you buy the stuff at full price with the business's promise that when you mail in the verification you will in turn get a check equal to the amount promised by the seller.

When it works, the seller makes money because they traded an item they wouldn't otherwise have sold and the buyer eventually gets a check in the mail that reduces the cost.

The problem seems to be that it usually doesn't work that way and that's because it appears it's not designed to. For example, about 40 percent of the buyers never send in the forms in the first place. The reasons vary but the point is businesses know there is a good chance the buyer will never even try to get the rebate.

Clearly, if the business wanted to sell something at a lower price it could just put the item on sale. Why make the customer go through a delayed process with all kinds of onerous requirements? A cynical person would say because the harder the business makes the process the fewer people will request rebates and, here's the payoff, the less costly it will be to the business.

In addition, even if the customer sends in the properly filled-in rebate forms and all required verifications, there is a short-term economic incentive to delay or even ignore the process. By that I mean if you delay sending out a rebate for say, three months, that is a free three-month loan to the business. Score one for the business.

If the business (or third-party rebate company) conveniently loses or says they never received the forms/verification it gets even better. Many customers, after waiting patiently for their rebates, but not having received them, follow-up with the business only to be told nothing was ever received and that they should submit the forms and verification again. The problem is most businesses require the original forms and verifications (usually sales slips and UPC codes cut from the box). If you've already sent those in, there is no way you can send them in again. If you send in copies, the companies, if they respond at all, will say the customer failed to send in the required original documents. Score another one for the business.

So it is interesting to see the US Federal Trade Commission (FTC), for the first time, has entered into consent agreements with computer superstore CompUSA and their third-party processor Q.P.S., Inc. The agreement, based on allegations that CompUSA failed to pay, "in a timely manner, thousands of rebates for products sold under the CompUSA and QPS brands. Under the terms of the settlement with the superstore, CompUSA will pay consumers who purchased QPS products at CompUSA their due or past-due rebates, which ranged from $15 to $100 each." One hopes you don't have to send in original sales receipts to get the rebates.

The bottom line is mail-in rebates are scams that work. One way to stop it is to stop buying stuff with rebates. If you refuse to do that, at least require some kind of delivery confirmation when you mail your rebates in. That way, you have a legal confirmation that the envelope was delivered to their address, who signed for it, and when. If they still refuse to pay, immediately file a complaint with the FTC and the Better Business Bureau. But don't come crying to me about rebates because I never buy anything with a mail-in rebate. YMMV. Insert disclaimer here.

Aloha!