CONSUMERS tired of the rebate runaround could find relief in reforms spearheaded by retailers and government agencies.
The Federal Trade Commission has warned retailers they could be on the hook for manufacturer rebate programs that fail to deliver. This month, the agency settled charges against CompUSA Inc. and QPS Inc., a maker of computer-related products, for a deceptive rebate program. It was the first time the federal regulatory agency had held a retailer responsible for a rebate program.
"The message to retailers should be clear," FTC Chairman Deborah Platt Majoras said in a recent speech. "If you promise to provide a rebate of your own, you must honor that promise in a timely manner. Even if you are advertising someone else's rebate program, you may not turn a blind eye when that company fails to honor its rebates."
Many consumers have misplaced rebate materials or forgotten about it altogether. Nearly half of shoppers surveyed last year by Cairo Inc., an online aggregator of retail sales programs, said they didn't participate in a rebate program because they lost the instructions, believed it was too cumbersome or it slipped their minds.
When they do remember, they fill out the form, clip the proof-of-purchase code, lick the envelope and then wait. And wait. And wait.
"So many more manufacturers are offering rebates, and consumers are taking advantage of them," said Sheila Adkins, who handles public affairs for the Council of Better Business Bureaus. "But either they don't get their rebate, or they are told by the company that they have not supplied the proper documents."
That's when consumers start to bellow. The Council of Better Business Bureaus reported a jump in rebate complaints to 1,710 in 2003 from 974 in 2002.
Tired of getting an earful from frustrated rebate-seekers, stores such as Staples Inc. and Costco Wholesale Corp. have taken matters into their own hands by simplifying and expediting the rebate process, even when it's not their program. Most rebates come from manufacturers, but when they go awry, it's the retailer that typically ends up with an earful from unhappy customers.
"We decided that if we can't make it an instant rebate, we would do the next best thing and make it easy to get the check," said Jim Sherlock, director of sales and merchandising for Staples.
In November, the office-products retailer decided to start an online rebate center aimed at making the process as painless as possible. There's nothing to mail in, unless you prefer that route. Just plug in the rebate program number and a 17-digit code found on your receipt.
At first, fewer than 30 percent of rebate submissions came through the Staple's Easy Rebate online program. The proportion grew to nearly 80 percent.
Rebates are a manufacturer's marketing tool to hook shoppers looking for a bargain.
"When they see a rebate offer, they think discount," said Howard Tong, vice president of NewEgg Inc., an online retailer of information technology and electronic products.
Unlike an instant rebate or discount that saves the customer immediate cash, mail-in rebate programs are far less costly for manufacturers because not every consumer follows through.
Retailers and officials who administer rebate programs say the participation rate drops significantly based on the rebate amount. Few consumers find a rebate of 20 percent or less of the price worth the trouble.
Also, rebates won't erode a product's perceived value compared with a lower selling price, and it's a great way to move slow-selling or discontinued merchandise, they say.
The FTC action shifts the balance of power away from manufacturers and toward retailers.
"I think what it will do is give retailers a little bit more control," said Brian Hatch, general counsel for Continental Promotion Group Inc. in Scottsdale, Ariz. His company administers rebate programs for retailers and manufacturers, running between 2,000 and 3,000 at a time.
Adkins said she is curious to see whether recent attempts to make the rebate process easier will contribute to a decrease in 2004 complaints.
Until then, keep an eye on the mail for that rebate check.
Lorene Yue is a Your Money staff writer. E-mail her at yourmoney@tribune.com
