There are two types of rebates, and you need to be on the alert


Many commenters to my earlier entry on sales in France had questions about rebates. Slate explained the whole rebate thing back in 2003. The short version: There are two types of rebates, manufacturer rebates and retailer rebates. Manufacturer rebates exist because they want the retail price to go down, but they are afraid that if they just lowered the wholesale price, retailers would not pass the savings on to the consumer. A manufacturer's rebate ensures that all the benefit of the price drop goes to the consumer and not to any middle-men. Retailer rebates, on the other hand, are carefully crafted schemes designed to trick the consumer into buying the product and then failing to meet all the requirements for redeeming the rebate coupon. Read the Slate article for details.

Comments (34)
  1. Dave says:

    Manufacturers aren’t always the "good guys" they’re made out to be in that article. In the past I’ve worked with companies trying to get their software into retail. The big-box stores educate software makers on how they can offer the software free-after-rebate but use the actuarial "breakage" to still make a few bucks of profit. Believe me, they have figured out the value every little rebate detail (especially deadlines) and how much it can make you if you get strict about it.

  2. Av says:

    I once mailed in a rebate to SMC for a Wifi adapter or something. It was like $30 rebate, significant amount for a $45 part. After 2 months, I received a nice little card informing me that my rebate had been denied because I had failed to provide the UPC (not true).

    I immediatly called SMC and spoke to some guy, who gave me his email address. I emailed him scans of the photocopies I had made of the UPC and other documents. 2 weeks later, I received my rebate cheque.

    Sure, they make it difficult to get your rebate, but retailers and manufacturers are banking on the fact that most people won’t bother to mail in the rebate, and won’t fight it if something goes wrong.

  3. Yaytay says:

    I always thought rebates where just a method for the providers to capture your details.

    "Registration" cards don’t work – everyone knows there is no point in filling them in, so now they offer money.

    I just ignore rebates – if the channel can’t get it’s act together sufficiently I’ll go somewhere else/buy something else.

  4. Anonymous Coward says:

    I especially find the registration cards pointless since they are usually addressed to some company in Colorado rather than whoever made the product. The questions are all the same (how much do you make, when are you next buying various items, which magazines do you read).

    I used to work for a software manufacturer. It turned out that we also had those registration cards which many customers diligently filled out (it was expensive software). Ultimately over a decades worth of cards ended up in a warehouse and noone ever looked at them.

  5. "I always thought rebates where just a method for the providers to capture your details."

    that’s another purpose nowadays, but is also true that they go by the probabilities, just like Av says "most people won’t bother to mail in the rebate, and won’t fight it if something goes wrong"

  6. Puckdropper says:

    I stopped looking at the after rebate price. If it’s an instant rebate, ok. If not, I figure I’m not getting it. There were some manufacturers in the hardware market that got into legal trouble over this a short (less than a year) time ago.

  7. Eli the Barrow Boy says:

    I’ve always wondered about this (though never done any research or anything :-). I agree that retailer rebates are structured to make people not meet the requirements, but maybe that can end up being a good thing for those who follow the rebate requirements carefully?

    That is, if Company A wants to beat Company B’s price on some product, maybe Company A can’t afford to offer a better sale price. But, if Company A’s finance guys can come up with a scheme whereby only 50% of people will actually do what’s necessary to get the sale price, then they can advertise a much lower price (via rebate) then Company B is offering on sale; and Customer A, who ran succcessfully jumped all of the rebate hoops, gets a better deal by shopping with Company A.

    I have no idea if that’s actually how it ends up working, but if so, instead of considering rebates a scam and avoiding them, it would be worthwhile to realize that they’re going to try to prevent you from fulfilling the requirements, but if you pay close attention you could get a fine deal.

  8. Trey Van Riper says:

    I refuse to purchase Iomega products as a consequence of their refusal to honor their manufacturer’s rebate with me back in the early 90s.

    I had carefully followed all their instructions, but they never mailed the rebate. Rather than fight them about it, I decided to deny them my dollar.

    If more customers would (and could) do the same, businesses might conduct themselves better. But, between the merging of various companies into fewer companies, and the desire for many large businesses to focus on locking people into specific solutions rather than actually solving problems for them, this option increasingly becomes more difficult to exercize.

  9. Mike Dunn says:

    Coincidentally enough, I bought a couple of NICs last week and just now sent in for the rebate. It was all done online, I just typed in a couple of numbers from the receipt.

    I’ll post again in 6-8 weeks to let you know if it worked.

  10. Patrick says:

    Is anyone else surprised that the AOL rebates have come back? Commit to x number of months and we’ll give you a big discount on a PC? CompUSA has even made a point of making the price tags in the flyer and the shelf tags in the store DISPLAY THE AFTER REBATE PRICE!

    I won’t be shopping there any time soon.

  11. John Goewert says:

    My favorite rebate scam story happened back in the Christmas season of 2000. On Black Friday, a big box store ran manufacturers rebates for free mice and keyboards after rebate.

    Many millions were sold US-wide, one set to my father. Less than 3 days later, the company that manufactured the devices went bankrupt, meaning that they wouldn’t have to pay but thanks for the cash to be able to pay off our collectors.

  12. It reminds me a Dilbert cartoon:

    Dogbert to Pointy haired boss: Instead of charging $29 for the device, charge $1,000,029 and offer a $1,000,000 mail-in rebate.

    Pointy haired boss : Great! We’ll target the lazy riches.

    :-)

    More seriously, I wonder why this manufacturer rebates mania is totally inexistant here in Western Europe (at least in Belgium and France).

  13. Chris O says:

    Could it just be because of the larger number of rebates offered in the US that more goes wrong? Or are there no consumer protection laws that companies need to follow?

    Here in Australia I have probably had 5 rebates in the past 5 years or so and all were fulfilled properly. HP/Compaq has been running one for about a year now with a $200 rebate in order to bring the price of their laptops down below $1000 – and I know of at least 2 other people beside myself who had no problem getting the rebate (apart from it taking 2.5 months)

  14. Chris Moorhouse says:

    When I worked in an MSN call center, I found out about a lot of people who were getting the short end of a rebate from a certain big-box retailer. You’d get a pretty good instant rebate off your new appliance if you signed up for x number of years of MSN dial-up access.

    Lots of people got locked into these contracts without even knowing what it was they were getting into. The people who had bought computers and were probably just trying to get money from MSN, but the people that had bought ovens and get MSN contracts out of the deal seemed a lot more like victims. Who to blame? Me, I blame the commissioned sales clerks, who get an extra two bucks for every contract they sell.

  15. X says:

    Rebates are also a way for the retailer / manufacturer to deny the consumer the right to return a product. Most rebates require you to send the UPC from the original box which voids your option to return the product.

  16. Jeff says:

    I remember when I was rooming with 3 other comp-sci undergrads in college. There was a big rebate offered by Maxtor on hard disks, and of course we each bought one for our PCs.

    Then we got home to discover "only one per address" so we marched right back to the Best Buy to return the drives.

    This was several years ago, before computers were really popular, and the store manager couldn’t believe we all four each had a computer in the same house.

    "I stopped looking at the after rebate price. If it’s an instant rebate, ok. If not, I figure I’m not getting it."

    Ditto. If it’s one of those online fullfillment things, I’ll do that. No sending in the UPC and all that crap.

    I’ve had salesmen argue with me about the price of something – "It’s only $50!" "no it’s not, it’s $120"

    I think Best Buy got sued here in Florida because the rebate price tags were larger than the regular price tags.

    "I refuse to purchase Iomega products as a consequence of their refusal to honor their manufacturer’s rebate"

    Are those boneheads still in business? I remember when their website was the very definition of "content-free" – you had to install a ton of plugins and stuff (all IE-only) and then you STILL couldn’t find out anything about their products. Except later I found out that’s because it’s all cheap crap that failed after a couple months.

  17. sas says:

    I think there’s only one kind of rebate, with a scale of sleaziness from the almost pure scam up to the honest, and not difficult to obtain rebates. I’ve had good experiences with a dozen or so rebates over the years, mostly for computer and other electronic stuff.

    I think the prime motivation for rebates is that they drive sales… lots of people just eat them up. Same with coupons. Which would you buy, a $20 cheapo PC card, or a $50 card with a limited-time $30 rebate? Ask manufacturers which one sells better.

    Of course they figure in the bonus of something less than 100% of rebates being claimed. It might let them give those who do get it have a little better deal than if they just dropped the price.

    No, it’s not evil, but yes, you are being manipulated (if you let them).

  18. arijit says:

    I always have preferred buying products with a rebate on them – be it Antivirus s/w, Laptops, Wifi Cards, Routers, many things. And I have always got enough time to fill in the rebate forms and send them back along with the UPC codes/ purchase proofs.

    I have always got back the promised amount. Was I lucky?

  19. Kyralessa says:

    I lost any respect for the Slate writer when he disclosed throwing out the box to his phone.

    What was he thinking? You never throw out any box to anything. That’s what basements are for.

  20. Kyralessa says:

    Incidentally, here is the secret for how to always send in a rebate. It’s very simple. Enlist your spouse’s help if necessary.

    The rule is:

    You are not allowed to play with your new toy until you send in its rebate.

    Every time I’ve strictly followed this rule, I’ve gotten my rebate money. :)

  21. hartwil says:

    Perhaps it’s the cynic in me, but I have always assumed that no matter who was giving the rebate, it was a way to get me on a mailing list. Even if you always mail in your rebates and always get them, there is a benefit to the company beyond what they would get from just lowering the price.

    Another interesting thing to think about: are manufacturer rebates a legal loophole to anti-dumping laws?

  22. kov says:

    Well I worked for a "manufacturer" (ie., software producer). Every release, a marketing dweeb would do a presentation to us developers on their efforts & expectations and one of the "costs" on their cost/benefit equation was "uptake" (i.e., people succesfully cashing in their rebates) and they always were concerned to make sure that number wasn’t too *high*, and everytime they rebuilt the whole rebate process and it never, ever got easier.

    I’d say that manufacturer does what you describe as "retail rebates."

  23. mirobin says:

    Before I fill out a rebate form, I make two photocopies of all of the materials right before they make it into the envelope.

    One copy is included with the rebate submission. The other goes into my filing cabinet.

    I figure if they know I’ve got a photocopy they won’t waste their time trying to pull a "you didn’t submit all of the required information" trick.

    So far, I’ve never had a problem …

  24. J. Peterson says:

    Funny rebate story: Apparently several years ago, Intuit (the people who make Quicken) hired a Marketing Genius to increase their profits. And the Marketing Genius said: "Offer a $20 rebate so the price seems really low and sales will go up." The finance people said, "won’t sending $20 checks to all our customers be expensive?" The Marketing Genius said "No, studies show only 10% of customers actually fill in their rebate paperwork."

    Unfortunately MG failed to consider what type of people personal finance software customers are. Detailed oriented types who care a *lot* about money. Around 90% filled in their rebate forms.

  25. In .nl you hardly ever see these kind of rebates. Sometimes with Coca Cola you get half the price of a bottle, or ome other fodd thing. Never, ever, with electronics equipment.

  26. anon says:

    Can anyone clarify what is an "INSTANT" rebate?

  27. Jack Vickeridge says:

    An aspect not mentioned is segmentation. If you offer a rebate that everyone knows takes considerable hassle to cash in, then people to whom time is more important than money will probably buy and lose the rebate, and people to whom money is more important than time will buy it with the rebate, when they might not have bought it at all otherwise.

  28. Tom C says:

    It recently took me 18 months to get a rebate from MadDog multi-media. When they respond to your email, they cut off your original note. So everytime I wrote them I had to go and dig up all the emails I sent to them in order to provide a trail.

  29. Good Point says:

    "Slate explained the whole rebate thing back in 2003"

    That was a very simple-minded article. Have the writer explain why Tivo has had rebates on their DVR seemingly forever. To move an old product??? No, to save a couple of bucks on a lower advertised price.

  30. Iain Clarke says:

    Something I haven’t seen anybody mention is sales tax.

    Say the state has a 5% sales tax. The price on the part is $100, with a $50 rebate.

    You get to the till, pay your $105, and hopefully get $50 back later.

    Should they not send you $52.50, or should the shop not charge you $102.50! Who keeps the stolen extra tax? On a large ticket item (eg a laptop), this is several beers!

    And I bet out-of-country people are ineligible for rebates too…

    (Mind you, not displaying the *full* price on a shelf is another pet peeve of mine. If you say it costs 99c, and I have a dollar, I want 1c change! not to have to dig for a nother few cents…)

    Iain.

  31. David Turner says:

    Serge,

    the reason you don’t see these hideous rebates in France and Belgium is that in most of Europe, the law forces retailers to display the complete purchase price to customers, and stand by it.

    This also means that if an item is incorrectly displayed as 20€ (instead of 200€), the retailer *must* accept a payement of 20€ from the customers. Playing with labels and prices is not allowed.

    What you see however are promotional operations like "pay 20€, and get 4€ back later", which are equivalent to rebates, except for the fact that the wholesale price must be displayed, not the discounted one.

    Unfortunately, this is not possible in the US since the prices displayed are already always without VAT (what we call "prix hors taxes"); mainly because the "sales tax" depends on the state where you’re buying.

    American consumers are so used to pay extra at the cash register anyway that they probably don’t realize how misleading this whole scheme is. Rebates are just yet another way to squeeze more money from them…

  32. I’m sorry but I can’t really buy this logic (pun notwithstanding). To me, manufacturer rebates are at best a sales gimmick because it’s generally true that customers won’t jump through whatever hoops are required by a given rebate program. In the store, a $100 mail-in rebate may seem great, but the manufacturers know very well that few customers will get around to mailing in the coupon. We may intend to, but Real Life distracts us. Very few retailers I know of would risk the PR hit from withholding a price reduction. That would be playing into their competitors’ hands.

  33. Nick Lamb says:

    "This also means that if an item is incorrectly displayed as 20€ (instead of 200€), the retailer *must* accept a payement of 20€ from the customers. Playing with labels and prices is not allowed."

    The main thrust of you comment was correct, but that bit in particular is an urban myth. All the jurisdictions involved have a legal principle of "mistake" or "error" which can invalidate any contract including the implied contract for sale of goods. This principle dates back to the 1800s or so in England when there were a series of court cases involving rather large errors. The classic US case on mistake is "Sherwood v Walker" (spoiler: the cow was pregnant) justice requires that no advantage be afforded by virtue of mistake, so the contract may be altered in part or voided. There are two reasons why this myth lives on…

    1. Customer service. If you find a €300 item with a €200 sticker in a high class store the staff may decide it’s easier to sell it to you for €200 than spend the whole afternoon with you screaming "I know my rights" at anyone who’ll listen until the police arrive.

    2. Small errors. If you offer a €40 product for €35 by mistake (rather than €200 vs €20 as in your example), the customer might reasonably think it is a genuine reduction in price. In law, this mistake is "unilateral" and might not be grounds to cancel a contract, though see below for other reasons why you might still not get your bargain.

    In many countries (e.g. Britain) retail sales are at the sole discretion of the seller anyway, he can refuse at any time until the sale is complete, and need not give a reason. There’s a reason for it being the nation of shopkeepers. In France a shop owner is obliged to sell at the same price to everyone, but agan he’s not required to accept mistakes like wrongly priced items, he can just refuse the sale and correct the price.

    Over the Internet you’ll find that the conditions of trade are usually written to ensure that no contract of sale exists until goods are dispatched. That means when someone notices that there were 480 000 orders for iPods last night, at $0.50 each, the company can just automatically generate "Sorry, we were unable to complete your order due to a computer problem" emails to each disappointed customer. Fix the web price, wipe the sweat from your brow and back to work.

  34. doug says:

    I’ll never believe the Maxtor rebate price again. I don’t know whether Maxtor or the rebate clearing house is responsible, but they owe me $125.

    Over a period of about two months, Fry’s had several sales on Maxtor hard drives. I was building a storage rack, so each time, I would buy one or two, then mail in the rebate.

    A few months later, I got back a rejection notice for the first drive — they claimed I hadn’t bought the drive within the rebate period. Ditto for all of the others. Eventually, by complaining and fighting and showing photocopied documentation, I was able to get 3 out of 6 rebates.

    To make matters worse, one of the 3 checks bounced, costing me $5.

    So never get something expecting to get a rebate unless you’re willing to fight for it. For me, that means the rebate has to be pretty substantial — say, $100 or more.

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