Monday, May 12, 2008

Instant rebates

The following snippets have been excerpted from a discussion in which somebody proposed that rebates should be made instant. It's the sort of idea that people endorse because they perceive a personal benefit without considering the economics of the matter.



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I am in the middle of an unsettling experience with a rebate. I purchased a $20 item thru the Internet (a reputable dealer, I think) with a $10 rebate. I filled out the forms, attached the invoice, and included the physical barcode from the retail product box as instructed.

8 weeks later, I get an email from the rebate service company. They claim that the barcode I sent was not a UPC code as the form requested, so they denied the rebate.

I have copies of all rebate forms, and the original product box. Checking the papers, I find that, sure enough, neither of the two barcodes from the box are UPC style (wrong number of digits, for one). However, there is absolutely no other barcode or UPC number anywhere on the box, any side. (It's probably a Taiwanese special "clone" product.)

So the rules say "must be original UPC barcode" to get the rebate, but there is no original UPC barcode available to the consumer. Catch-22.

I have written both to the rebate servicer and the dealer, since it appears that 100% of the claims for this product will be rejected. What a scam. Let's hope the dealer sets this right, or I will escalate it to some government authority just out of spite.

But this brings me to the OP: rebates are universally hated by consumers, regularly not redeemed, but frequently used as a sales tool when the advertisers know well that many (most?) purchasers won't get the rebate either for reasons like the example above, out-and-out fraud by the rebate servicers, or consumers who don't care for a measily ten bucks.

I am against the idea of "there oughta be a law" in principle, but in the case of fraud, laws may need to be passed to prevent it. And this situation is at least a borderline case of fraud, IMHO.

So should there be a law that all rebates must be given (or at least offered) at the time of purchase? It would make every transaction fair. The consumer would know at the register or checkout that they qualify or not for the rebate, and if there was a problem, it would be solved before the transaction was completed.

What are the implications of such a law?
Manufacturers would have to adjust the amount of the rebate offered to allow for a greater number of redemptions, and adjust for the reduced float, but see #2.
Retailers would have to work out an arrangement with the manufacturer or distributor to be compensated for the instant rebate. Doesn't sound like a big problem with electronic transfers and computerized billing. It's a lot easier for a store to do this as a composite figure for one day's sales than for each customer to do it individually. It would make the rebate centers go out of business, and perhaps the amount of rebate could be increased, since the administration cost would be less.
Does any state or country have such a law? Would it be a good idea?

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No they shouldn't.

That defeats the point of the rebate. The rebate is a clever little ploy to make it seem cheaper. They bank on the fact that not everyone will send it in, so they get to advertise a cheaper price than they actually will end up receiving. If you make all rebates instant there won't be much of an incentive to give them out anymore. If you give out 20 dollar rebates they will only really cost you say 10 dollars, because maybe half the people don't use them.