Consumers lose out at close of CyberRebate

From...

By Anne Kandra

(IDG) -- This summer, thousands of CyberRebate customers were left high and dry when the company closed its doors and stopped issuing promised rebates.

CyberRebate wasn't a traditional rebate program, in which you buy a competitively priced printer (for example), send in the form, and wait for a check. Instead, it was like the XFL of rebate plans: a much-hyped, slightly contrived-sounding business. It promised that if you paid inflated prices for products -- a $50 telephone, for example, might cost $350 -- and sent in the required forms, weeks later you'd get a check for most or all of the price you paid.

In return for letting CyberRebate hold your money for as long as 14 weeks, you'd get a phone, PDA, or movie for free.

This scheme has more warning signs than a nuclear test range. But for a while it worked. People got hooked. When the company filed for Chapter 11 bankruptcy in May, it owed over $83 million, mainly to consumers who never got their checks.

Clearly, CyberRebate is an extreme example of rebates run amok. But how different is the CyberRebate experience from what we've all been through with typical rebates? Many of us have waited for a check that never arrives -- with no vendor bankruptcy to blame it on. But getting a rebate doesn't have to be frustrating. I'll point out some of the gotchas and offer tips so you can make sure you receive what you're entitled to.

Why do so many companies fall short on their rebate promises? The usual excuse is that they become "overwhelmed" by consumer response and fall behind in processing and fulfilling the mail-in forms. Evidently, it doesn't take much to overwhelm those rebate departments. Studies have found that as few as 2 percent of consumers eligible for rebates apply for them. With such low response rates, companies should be able to hire enough people to handle the requests.

IDG.net INFOCENTER

Related IDG.net Stories

Features

Visit an IDG site

IDG.net search

Of course, companies often hire outside firms to fulfill rebate obligations, creating a recipe for customer service meltdown: You contact the vendor to find out where your rebate check is, and the vendor sends you to the fulfillment house, whose employees may not know or care. A classic game of finger pointing ensues, and you're left feeling frustrated and powerless. Since obtaining a mail-in rebate usually depends on establishing a physical paper trail, you may be out of luck.

Another common complaint is that companies change the rebate rules or fail to make clear the ones that determine eligibility (for a good example, see On Your Side). Scott Smith of Kirkland, Washington, writes that OfficeMax rejected his $45 rebate request for purchasing 200 blank CDs because he failed to provide an e-mail address on his form. "I [deliberately] omitted my e-mail address because I didn't want to get junk mail. What would someone without an e-mail address do -- make one up? Or just not get the rebate?" Smith asks.

An OfficeMax spokesperson says the manufacturer that offered the rebate no longer requires an e-mail address and has offered to get Smith his rebate.

In a way, Smith was lucky all along: At least OfficeMax explained the rejection. Many customers who dutifully clip UPC labels and fill out request forms might as well drop them directly into the recycling bin. Whether the form gets lost in the mail, misdirected, or thrown away by an apathetic clerk is anyone's guess. Unfortunately, most consumers don't have the time and energy to harass companies until they make good on their obligations.

One egregious rebate problem involves retailers who offer generous discounts on PCs for customers who sign an extended contract for Internet service. These deals might sound good on the surface, especially to first-time buyers, but retailers often neglect to clarify the terms and conditions, which usually involve lengthy, inflexible, and expensive service contracts that can quickly offset any rebate savings.

Consider these facts: The ISPs that offer rebates may not have access numbers you can dial for free; you may not like their service; and just as you commit yourself to three years of dial-up service, broadband may arrive in your neighborhood. Suddenly the deal doesn't look so magnificent. But in many cases if you end the service contract early, you'll have to pay a large penalty or return the rebate.

The good news is, the Federal Trade Commission and other consumer protection organizations have noticed and are taking action against rebate offenders. Last year the FTC warned traditional and online retailers that it will closely monitor rebate offers. The commission also reminded manufacturers and retailers that the company advertising a rebate -- not the firm hired to fulfill it -- is legally responsible for the program. Since then, the FTC has brought charges of deceptive advertising against a number of companies, including Buy.com, ValueAmerica, and Office Depot.

In April, New York's state attorney general settled a deceptive advertising case against CompUSA for failing to clearly disclose the terms of a rebate offered by a now-defunct subsidiary. And in March, Florida filed suit against America Online's CompuServe for failing to deliver promised rebates in a timely manner. (AOL Time Warner is the parent company of CNN.com.)

Of course, when companies follow the rules, rebates can be a great deal for consumers. So if you decide to play the rebate game, here are some tips to help you come out ahead.

Don't base a purchase decision on a rebate offer. Consider your needs, preferences, and budget before the rebate.

Check the expiration dates on rebate coupons and ads. Brick-and-mortar retailers don't always remove expired promotional material promptly. If you're shopping online, check the Web site of the company offering the rebate, or visit a site like Rebateplace.com or RebateCatcher.com for the current offerings.

Follow the instructions on the rebate form exactly. If you make a mistake or omit information, your chances of getting a check might go into the wastebasket.

Make copies of everything you send. You'll need those documents if you have to fight for your money.

Keep track of all dates, including when you mailed the request and when the check is due to arrive. (For hefty rebates, you may wish to send the application via certified mail.) A company called Six International offers a free downloadable utility it calls Rebate Rebate that can help you track multiple rebates.

If the check is late, call or write to the company. Include copies of all supporting documentation. If the product manufacturer refers you to another company, make sure you continue to copy all correspondence to the manufacturer -- since it is ultimately responsible for the rebate.

If all else fails, write to the FTC and your state's attorney general. Include all dates, copies of documentation, and records of communications between you and the offending company.