Rebate Roulette
Janet Rae-Dupree and Tom Spring
Janet Rae-Dupree is a freelance technology writer in Silicon Valley. Tom Spring is a senior reporter for PC World.
Illustration by James Yang
When Paul Theisen, president of Unlocked Potential, a hiring consulting company in Livonia, Michigan, bought Symantec's Norton AntiVirus 2003 at his local OfficeMax, he thought he was getting the software for free--it cost $70 with $70 in rebates. So he filled out the forms, clipped the UPC labels, and mailed his claims.
After three weeks, a $30 check arrived for one of the two rebates. Two and a half months later, he received a notice indicating he was ineligible for the second rebate of $40 because he was missing some paperwork. "But the note didn't specify exactly what was missing," says Theisen.
After making many calls and faxing a copy of the UPC label and the receipt, he was denied again. This time, the rebate fulfillment house for Symantec told him the promotion was over. Theisen felt he was at a dead end. "Talking to the reps is like talking to parrots," he fumes. "No matter what I said, they kept repeating that I didn't send the correct documents." (After PC World contacted Symantec, the company eventually sent him the $40 check.)
Theisen's experience is only one example of what can go wrong. Another snag may involve a lack of contact information for disputing a rejection. And some rebate coupons are written in such tiny type that you might need a magnifying glass.
We investigated what goes on behind the scenes, talking to shoppers who collected rebates and to others who were left empty-handed. We grilled manufacturers, retailers, and fulfillment houses (which administer rebates) about the pitfalls in the process; companies sometimes point their fingers at each other, leaving buyers in a runaround frenzy. We also asked government agencies what can be done to improve the system.
In the end, we discovered that there is no magic formula. If you've decided to go the rebate route, and you need a bit of help, we recommend a few stores that make the filing process a little easier, and we also give some advice on how you can improve your chances the next time you play the rebate game.
Breakdown in the Process
Rebates are a headache for consumers, a tricky situation for retailers, and a major expense for manufacturers. So why are we seeing more rebate offers than ever before? Because stores and product makers want to lure shoppers into buying their products, and they know some people won't collect.
Market research firm Aberdeen Group reports that about 60 percent of buyers who could redeem computer-related rebates don't try. "That's money the store and/or the manufacturer keep," says Aberdeen analyst Peter Kastner. Of the 40 percent who give it a shot, half experience problems or don't get a check at all.
In addition, rebates are evolving beyond the simple $5-back-on-a-$50-purchase model. Many software vendors, including Symantec and Pinnacle Systems, offer "net-zero" rebates in which buyers, like Theisen, are promised all of their money back (except, of course, the sales tax). But the burgeoning number of rebate deals in newspaper ads, on store shelves, and on Web sites has resulted in a crescendo of consumer complaints. PC World's On Your Side mailbox and chat boards such as those on FatWallet.com (a site that offers shopping information and tools for saving money) are overflowing with gripes about denied rebate redemptions.
Part of the problem is that three parties--the product manufacturer, the retailer, and the rebate fulfillment house--are usually involved in the process. Each company ends up relying on the others to ensure that things go smoothly.
Rather than process thousands of redemptions themselves, manufacturers and retailers frequently contract with a fulfillment house to open and sort mail, log in consumer data, and, if all requirements have been met, issue rebate checks. But those fulfillment houses can't cut any checks until the sponsoring manufacturer or retail store hands over the rebate money, which can take anywhere from 15 to 90 days after the fulfillment company's invoice date. If the sponsor pays the invoice with a paper check, the fulfillment house must wait several days for that check to clear before it can write any checks to consumers. Sometimes the manufacturer doesn't pay the invoice at all; a few fulfillment houses (which prefer to remain anonymous) told us that they have quietly gone to the Federal Trade Commission to report such a problem.
Onerous Requirements
Some rebate offers are so aggressive that the products are virtually free. At Outpost.com, for example, Pinnacle Studio 8 video editing software costs $79.99, but is-$0.01 after an $80 mail-in rebate. Such a deal, right? Not necessarily.
The $80 rebate is actually two offers: a $50 one that requires proof of upgrading from a competitor's program (a preloaded version on your PC doesn't count); and a $30 offer that must be sent to the same address--but to a different department. Another requirement: You must send either the title page of the user manual for a full version of the older software or the old installation CD.
How can you find out about the rules before you sink your money into the product? Manufacturers often tuck the details inside the product box, which, once opened, cannot be returned. Retailers don't provide rebate rules until checkout, either, though you can ask a cashier to print out the rules before you buy. The process is a little easier online, where many merchants provide the rules.
Vendors, such as McAfee Security, have tried to be more forthcoming about the details by listing them on a little sticker on the box. Emphasize the word little. The McAfee Personal Firewall Plus coupon we looked at was barely larger than a butterfly
Not only is the type on this McAfee coupon tiny, it also has demanding proof-of-purchase requirements.
, with letters about the size of starving fleas. The label has roughly 700 words of fine print on one side and a cramped form on the other. And if the software is shrink-wrapped, you probably can't peel off the sticker to read the details.
McAfee says its stickers are standard in the software industry, especially now that some programs come in a box about the size of a VHS video tape. "We want to offer the terms and conditions up front, and that requires a small sticker [in the new packaging]," says Michelle Jimenez, McAfee marketing manager.
If you can't read or find the rebate requirements, ask the store or call the manufacturer about the specifics.
Finger-Pointing
Some manufacturers say that they offer rebates partly because retailers want them to. "A retailer might say, 'We're having this sale and we want to hit a certain price with this product in our ad. See what you can do,'" says Lewis Lustman, marketing director of Iogear, which makes input devices, networking hardware, and other PC peripherals. "The onus then is on [manufacturers] to come up with something."
The good news for manufacturers and retailers is that rebates can make their bottom line look good, at least temporarily. "With money in the bank, there is no hurry to pay the rebates," says Todd Fernandez, a financial analyst at Glass Lewis & Company. "Businesses can sit on consumer money [while it earns interest] for a quarter, or sometimes two--a great way to facilitate working capital."
However, some retailers aren't happy about delaying tactics. As a general rule, "if [shoppers] buy a product offering a rebate, [they] should get it, and get it on a timely basis," says Dave Bennett, vice president of pricing at Office Depot. The retail chain promises its store-sponsored rebates within eight to ten weeks.
Like many retailers, Office Depot has limited control over the company that handles manufacturers' rebates. Bennett understands shoppers' frustrations: When they find rebate rules that are unreasonable, their first reaction is to get "mad at the store they bought [the product] from," he says.
But consumers also get mad at the fulfillment house. For instance, TCA Fulfillment, which handles rebates for Brother, CompUSA, Kingston, Micro Center, Samsung, and many other stores and vendors, is described as one of the worst rebate processing companies by participants on FatWallet.com's chat boards, and it has had an unsatisfactory rating with metropolitan New York's Better Business Bureau for most of its history.
Some angry consumers have even accused TCA and other vendors of deliberately losing rebates owed.
"That is such urban folklore," counters TCA founder and CEO Frank Giordano, explaining, "We are a service organization. We get paid for every redemption request we enter in the system. If we don't put it in the system, we don't get paid."
The BBB reports that TCA has exhibited a pattern of not responding to consumers' complaints. "More than 90 percent of [these complaints] were from irate consumers who'd been denied [a rebate], usually for good reason," says Giordano. "We thought it was a waste of time to explain through a middle party, like the BBB, why their rebate was rejected."
New York BBB spokesperson Ronna Brown says that "if TCA told us that all complaints are related to one manufacturer not paying its invoice in time, we'd take that into consideration. [But even if] the volume of their redemptions is incredibly high, they still need to respond to complaints." Brown acknowledges that the fulfillment company has resolved hundreds of complaints in the last year.
Watchdogs Step In
If the retailers aren't trying to scam the consumer and the manufacturers aren't trying to pull a fast one, and the rebate houses are cranking out checks as fast as they can, who's at fault when rebate experiences go sour? The company sponsoring the rebate is ultimately responsible. And when you can't get a rebate dispute resolved, where do you turn? That's where the FTC and the state attorneys general offices enter the picture.
Matthew Gold, a staff attorney in the San Francisco office of the commission, says that some patterns of deception are spotted when the rebate's sponsor is in financial trouble. Over the past few years, several cases have been filed against manufacturers. One of these, Prime Peripherals--also known as OKie Electronics--eventually filed for bankruptcy.
"[The FTC] hasn't seen a lot of outright fraud," Gold says. More often, he adds, it's a case of a small company not anticipating the level of response to the offer, or a big company too caught up in its own bureaucracy to deposit funds into the fulfillment house's bank account. "Typically, once [the FTC] gets involved, the companies are reasonably responsive, meaning they either admit they're in financial trouble or they try to get the money out to consumers." It's rare for the FTC or a state attorney general to file suit against a company for failure to pay rebates.
"We don't disclose the companies we are investigating, but if we receive a number of complaints [about a specific vendor], we look into the situation," says Brad Maione, press officer for New York State's Attorney General. "We may also be able to mediate without taking any formal action."
Government agencies continue to help consumers learn to, as the FTC puts it, "take the 'bait' out of rebates." Be sure to read the commission's assortment of helpful tips. And check out our advice in "Rebate Tips."
Stores Make Rebates Easier
Some leading retailers, hoping to entice customers to make all of their rebate-eligible purchases in one place, are trying to make redemptions easier.
The warehouse club Costco, for example, was among the first to blaze a rebate trail by printing out a separate rebate receipt and cash-register-generated claim form along with the customer's copy of the receipt. Most rebates redeemed through Costco don't even require clipping out the UPC, and the bulk of them can be redeemed online, saving even the 37-cent postage stamp. But beware: Wait more than 30 days to file, and you're out of luck.
Office-supply retailer Staples extended its filing deadline from 30 days to 60 days on most rebates. It also plans to offer online redemptions this year. But like other stores, Staples doesn't combine all of its vendors' rebates into its own program, which is processed by Parago. So be sure you understand whether the rebate is through Staples or the manufacturer.
Best Buy, Circuit City, CompUSA, OfficeMax, Office Depot, and Walgreens don't combine all of their vendors' rebates either, but they do print separate rebate receipts. Some of them, including Best Buy, also print out claim forms at the register as Costco does, and they offer toll-free customer-service phone numbers for reporting problems.
J. R.-D.Rebate Tips
Illustration by James Yang
Check the expiration date: Some rebate offers expire faster than a carton of milk. Always check a rebate's promotion period. A merchant may have failed to update its ads or may carry leftover inventory from a promotion that has ended.
File promptly: Send the rebate claim right away. Some stores and manufacturers require that you submit a claim within 14 days of purchase--which is often shorter than a shop's return policy.
Follow all instructions: If the form says to use blue ink, do. Fill out every line.
Keep copies for your records: Copy everything before you send the claim.
Use certified mail: It proves that someone received your rebate request.
Set reminders: Mark your calendar for the check's estimated arrival. Or download the Rebate Rebate tracking freeware.
Check the status: For redemption tracking, many rebate houses provide a URL, such as www.wheresmyrebate.com or www.rebatestatus.com.
Get in touch: No sign of a check by the due date? Begin documenting your calls.
File a complaint: Report problems to the BBB and the FTC (use the site, or call 877/382-4357). Write to your state attorney general's office, or to the office in the state where the rebate sponsor is located. Contact your local media (newspaper, TV, and radio); they may have a consumer advocacy department that can mediate on your behalf.
J. R.-D.