Wednesday, May 24, 2006

Rebates Are Legal Scams and Legal Fraud

The deal looks really good. For a limited time you can buy a laptop computer for only $800. Then you see an asterisk. You read the fine print -- it says 'After Rebate'.

A rebate is just another kind of discount, right? Just another method that marketers use to get buyers to buy, right? So why not? You go ahead and purchase your new computer.

Then you look at the rebate form. There are tons of rules, conditions, documentation, deadlines, etc. Hum, seems a bit more complicated than just a discount.

So you put all the material together, forget about the deadline for a while and then with just a week left you send in what you think is needed because some of the language is not very clear.

And you wait and you wait and you even forget until after a couple of months you realize that you have not gotten your check. So you dive through a stack of papers looking for the address where you sent your rebate documentation. You mail a letter asking for your rebate. Again you wait a month and finally you get a reply. Sorry, you forget the UPC code on the side of the box, therefore you do not qualify for a refund. Now you still have the box and the UPC but it all had to be sent together -- so guess what: They Gotcha!

Rebates are a marketing trick, plain and simple. They entice buyers with the lure of a discount, but only about half of the buyers actually get around to filing for the rebate according to the latest statistics. Next about half of the people who buy, send in the rebate forms, but only about half of those are acceptable to the company, again according to the latest estimates. Bottom line: one quarter of the people who buy a product with the promise of a rebate actually get a check in the mail.

Think that this happens because people are lazy or just can't do the paper work? Guess again. It is a well planned strategy by marketers to give the appearance of a good deal, while not really offering very much. It's the old advertising adage, "Sell 'em the sizzle and not the steak."

For openers marketers know that half of the people will never send in the forms. It is called slippage in the business. And the longer the deadline, the less likely you will remember. Next if they make the paper work complicated and the language vague, you are bound to make a mistake, so they can deny you the refund. In addition a rebate is not really a discount. As a result, unlike a true discount, you pay tax on the full amount of the purchase before the rebate kicks in.

When only a quarter of the people actually see any money from a legitimate offer something is very wrong. I call this 'rebate scam', 'rebate fraud', even if it is legal.

And as consumers you should avoid rebates like the plague UNLESS you read all the find print before you buy and make sure that you will actually file long before the due date. In addition you should make copies of everything you send in and mark on your calendar when you mailed in the rebate, the date of the deadline and when you should expect your check. WHEW? Sounds like a lot of work. And it is, deliberately.

I suggest you only go for rebates of fifty dollars or one hundred dollars or more. And if you have trouble collecting, be a big nuisance. Contact the Better Business Bureau in the city where the company is located, the fraud section of the US Federal Trade Commission and post details of your problems on related Internet newsgroups.

Don't let marketers push you around because they are counting on you to give up and not really make a fuss.


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