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News & Updates - Wednesday, November 23, 2005

Just Say No To Rebates

Some months ago, we ran a post where we bemoaned rebates for tech products and tried to make a case that such scams are bad for business. It seems that some regulators agree, according to BusinessWeek which nails the story. In October, New York Attorney General Eliot Spitzer settled a case with Samsung, which agreed to pay $200K to 4K consumers who were denied rebates because they lived in apartment buildings. (only one rebate per address). Last year, California State Senator Liz Figueroa introduced a bill requiring companies to grant customers at least 30 days to apply for a rebate, mail checks within 60 days of receiving an application, and standardize the paperwork and personal data needed for a claim. The bill passed but was vetoed by Governor Terminator.

According to BW, some companies agree that rebates are bad business. Best Buy plans to phase them out in two years. At Staples, mail-in rebates were the No.1 customer complaint so a year ago the company switched to an online system that customers use to file for rebates and track their progress.

Nevertheless, it seems that most companies still think they can milk this scam. Nearly one-third of all computer gear is now sold with some form of rebate, along with more than 20% of digital cameras, camcorders, and LCD TVs, says market researcher NPD Group. A researcher called Vericours calculates that about 400M rebates are offered each year with a face value of $6B. But 40% of all rebates never get redeemed because consumers fail to apply for them or their applications are rejected. For example, about 50K recent TiVo buyers among 104K new subscribers failed to redeem mail-in rebate offers, reducing the company's expected rebate expense by $5M.

Read - The Great Rebate Runaround (BusinessWeek)
Read - Rebates Bad For Tech (The a:c)