My ZDNet colleague Adrian Kingsley-Hughes has a fascinating post on how rebates work:
A rebate puts a number of obstacles between the customer and their rebate. The idea is that the customer stumbles at some stage (maybe they forget about the rebate, or they make a mistake when filling out the form, or maybe they lose the sales receipt) and the store of vendor wins. When a customer fails to claim their rebate, this is known in the trade as a breakage. When a breakage occurs, the customer loses out and the store or vendor wins (because they get to keep the money!).
What I find most interesting is that some of the tricks the big companies use are documented in a U.S. Patent Office application that Adrian quotes liberally.
I make no secrets of my feelings about rebates, but it is possible to increase your odds of collecting what’s due you.
Ed Bott 
I’m no great fan of rebates, but shouldn’t it also be taken into account that the rebates offered probably allow for a certain percentage of ‘breakage’. Thus a company can offer a $10 rebate knowing that it will probably only cost them, say $7, on average. If they give it as a discount instead then they’d probably only give $7. It’s more tranparent, but it means that those who make the effort to mail in rebates now are likely to lose out.
I really dislike rebates and believe it’s made difficult just for the very reason you discribed.
Dave, that’s exactly the point Adrian makes in the article. Those who are careless or distracted or disorganized or unlucky get to subsidize those who are fanatical about the process and for whom every detail falls neatly into place.
My personal philosophy is to never make a purchase that involves a rebate unless I feel that the before-rebate price is acceptable. That way I can tolerate the risk that the rebate won’t be honored.
I also ignore the the after rebate price. I know myself well enough that I will rarely have the time, patience, or inclination to stumble through all the hoops to claim my rebate. In fact, if I have a choice, I avoid doing business with people who engage in this (often misleading and even deceptive) practice.
Of course, the other problem with rebates is that you have to pay pre-rebate price, and any taxes on that price. So in jurisdications where sales taxes are collected, the rebate is worse than a discount even when you get it.
This is part of the general practice of not stating the price/saving that the consumer will experience, just how it looks (good) stated from the seller’s perspective.
So anything I do to my telephone bill that reduces it, also reduces taxes by an appreciable amount (except for the fixed-amount taxes that are inescapable). Any any thing that I’m told costs only a few dollars more, always costs more than that.
Ed, I understand the point, but my point is really twofold.
One, if you make a decision to buy something based on the rebated price it’s you, and noone else, is responsible for sending in the rebate. Saying that the company is in some way at fault for trying to ‘trick’ you is daft.
Two, like many other areas of business (i.e. pretty much any flat rate offer) some people are subsidising others. The issue can be removed but everyone would have to expect less deep discounts.
Cheers
Dave
Dave,
On at least two occasions, I followed every single rule for a product rebate.
Once I was denied the rebate for months because the company (Dell) insisted that my order was placed after the eligible date, even though I had e-mail confirmations and printed receipts from them showing the correct dates. It took literally a dozen phone calls and many hours to get the $200 rebate.
On another occasion, I was eligible for a $40 rebate for some Netgear routers. Again I followed every rule scrupulously and wound up getting stiffed because the products “weren’t eligible. ” They were, and after a few e-mails and phone calls I got my $40.
My point is that the processes don’t always work properly, even when one follows every single rule. If these had been $5 rebates I might have given up. Which is exactly what the companies count on.
So I stand behind my point.
I agree that things fail. I’m not helped by the fact that I live in the UK where we, generally, pay more than the US and get fewer rebates.
I’m not really disagreeing with you, I just thinks it’s important that people fully understand the overall context.
Rebates are just another variation on standard techniques for allowing customers to self-select their level of price sensitivity. Businesses will try to maximise their profits, those of us who invest, whether directly or through pension plans etc, expect nothing less of them.
We can either have complexity, where some people do well and others don’t in any particular situation, or uniformity with prices that fix themselves somewhere between the ‘standard’ price and the ‘rebated’ price. What doesn’t work is having the rebated price all the time, and that needs to be clearly understood. I’m sure you understand it, along with most of the people reading your blog, but experience tells me that an awful lot of people don’t.
Cheers
Dave
Ed’s being generous when he says that the rebate companies have processes that “don’t always work properly.” The whole point of rebate processing companies is that they have an incentive to fail to work properly as much as is possible without going into outright fraud. Their internal processes almost certainly deliberately involve mimeographs and attaching forms to pigeons’ legs. Hey, they’re not TRYING to lose your rebate, it just happens sometimes!
It must be hell working in IT in one of those places. Every innovation you can come up with that would make them more efficient, more effective, and more accurate is a revenue-cutting proposition.
Anyone tried the inphonic/wirefly rebate process? Oh my god . . . the rebate form must be sent in 6 month after purchase within a 30 day window . . . plus they split the rebate into 2 forms/mailing hoping that you will screw up/dont bother with it/or post office losses one of them . .I bet their redemption rate is no more than 20%
sadly, my blog post on getting ripped off by wirefly still draws a more traffic to my blog from Google than anything else.
I’m trying to collect a $90 rebate from HANNS-G monitor offered through Office Depot. They’ve turned me down twice for bogus reasons but say they are going to pay. I’ll believe it when I see it. Anybody know of any attorney looking to file a class action over rebate scams?
I am trying to find a phone # to call hanns-g about my $90 dollar rebate I submitted in November.
Help!!!!!!!!!!!!!!!
anyone
READ THIS WITH REGARD TO THE HANNS G MONITOR REBATE. THE PAYOR IS NOT FUNDING THE REBATE ACCOUNT!!!
$100.00 Check
Rebate Information For:
Promotion: $100 Rebate with Purchase of Hanns-g 19″ LCD HC194D or HC194DP from Buy.com
Submission Type: ON-LINE
Date Received: 01-07-2007
Status Detail: Please be advised: Parago, Inc. is a provider of rebate processing services for its clients. As a rebate processor, Parago works on behalf of Wintergreen Systems to receive mail, perform data entry services, receive customer service calls, print checks, and perform other services associated with its promotions. For the submission in question, Parago performed data entry on the submission, and forwarded the information to Wintergreen Systems for approval and funding. To date, Parago has not received such approval and funding from Wintergreen Systems. Until Wintergreen Systems forwards additional funding for the promotion in question to Parago, Parago will not be able to mail any additional consumers checks under the promotions. We apologize for any frustration this has caused, and will process the reward as soon as we are provided the required funding and approval by Wintergreen Systems. In the interim, we suggest you contact Wintergreen Systems directly, at:
Wintergreen Systems
2510 Sterling Avenue
Elkhart, IN 46516
(574) 295-9054 ext. 110
Good luck getting a hold of Wintergreen. There recorded message says to send an email. When you send an email you get a “out of office response.” This was a scam from the start. There was no good intentions associated with this from the start. The dissapointing this is that office depot is still selling Hanns G monitors. they should have some liability in this as well as other retailers who use the rebates to advertise low prices.
I called my local Office Depot and they gave me this no 1-877-470-3621. They are taking care of the rebate that wintergreen failed to do.
p.s. They need the purchase date.
I contacted Hanspree and they did not know of the rebate or the problem. Or they did not want to discuss the problem Buy.com, said they would work on the problem
I just got off the phone with Office Depot returns and the phone person had a script to deal with my request for a return tag and a full refund. Now I’m writing this now before the promised call back so who knows? If I don’t hear back I’ll try the number above. Down with the corporatocarcy!!!
Put a claim in with your credit card company. Hit Buy.com where it hurts. You bought from Buy.com, not from Wintergreen or Parago or anyone else, and they have failed to deliver everything you contracted for – namely the rebate. Your contract is with Buy.com – telling you to contact Wintergreen is a complete run around. Forget the FTC, the BBB, the Attorney General and those guys who take forever, just go after the money.
It took a “Guide yourself accordingly ” letter to the president of Buy.com on my law firm’s letter head, but it appears to have worked. Their customer service response was that a $100 credit for the rebate would go back on my credit card. Now I am waiting to see if it is done.