Deals that look too good to be true usually are. But when I heard Microsoft (NASDAQ:MSFT) would pay me $200 just to buy something I was already going to buy -- well, that was just too much money for me not to give it a try.
For a while now, Microsoft's Live Search program has offered cashback deals on purchases from a variety of vendors, including Gap (NYSE:GPS) and Hewlett-Packard (NYSE:HPQ). But since I don't usually shop those stores, I never bothered to sign up.
But when I heard the program was offering ridiculous amounts of cash back for purchases through eBay (NASDAQ:EBAY), I decided to overcome my skepticism and take the plunge on Live Search. Now that I'm several hundred dollars richer, Microsoft can count me among the converted -- at least until the deal goes away.
In search of free money
When it comes to great deals, I'm an inveterate freebie-seeker. Ever since I found my first quarter in a pay-phone slot 30 years ago, I've looked for opportunities to score free cash.
When American Express (NYSE:AXP) offered me 50,000 points to sign up for a gold card earlier this year -- enough to buy two plane tickets, the invitation claimed -- I jumped at the chance. When JPMorgan Chase (NYSE:JPM) offered me a 0% balance transfer a few years ago, I borrowed as much as they'd let me -- and parked the money in a high-yield savings account, pocketing the interest for six months until I had to pay it back.
But Microsoft's deal through eBay is a lot better than finding loose change at the bottom of the swimming pool. We're talking about huge amounts of money.
Buying for a discount
If you're willing to jump through a few extra hoops, the Microsoft/eBay cashback deal can save you hundreds on purchases. Although there are some restrictions, you can get rebates of up to $200 on anything you buy on eBay. And you can do so up to 12 times, meaning you can save up to a cool $2,400.
What's more, the hoops aren't that difficult. Here are the steps:
- Sign up for a Live Search cashback account.
- Use the Live Search engine to find an eBay-sponsored link that promotes the cashback offer. This is the hard part, but you can use a common search term like "Wii" or "gold," even if you want to buy something else.
- Click on that sponsored link, and then find the eBay item you want. Note: You have to use the "Buy It Now" option.
- Pay with PayPal.
That's it. When I used it last week, I got 25% off up to $200 instantly deposited in my PayPal account. In other cases, you may have to wait a while before your rebate shows up in your Microsoft cashback account.
A boon for eBay
As I pondered this, I realized that as good a deal as this is for me, it's also really good for eBay. In order to get that $200 in cash back, I had to buy from an eBay seller who was willing to pay selling fees. Also, because I have to use PayPal, the seller has to pay fees there as well.
So on my $800 purchase, my seller would have to pay:
- $0.35 to eBay to list the item.
- $51 in final value seller fees to eBay.
- $23.50 in PayPal fees.
So in the end, my seller would make $725 on the sale, I'd pay $600, and eBay would generate $75 in fees -- all thanks to Microsoft.
A viable business model?
I understand that Microsoft has to compete with Google (NASDAQ:GOOG) for search-engine traffic. But man, this seems like a huge price to pay for traffic -- traffic from many people who are probably just as fickle as I am.
Already on eBay, hundreds of sellers are using the Microsoft offer to justify paying premium prices for items. People are selling $500 gift cards for much more than $500, banking on the Live Search cashback to make up the difference. Gold bullion coins are selling at huge premiums to spot value. It has to be unsustainable -- even if it's good news for Christmas shoppers looking to save wherever they can.
While it lasts, though, I'll take advantage of the gold rush. It's not the first time a company spent more money than they should to earn my loyalty temporarily -- and I'm sure it won't be the last.
For more on what's going on in today's economy, read about:
- The biggest threat to our economy.
- Why Buffett's buying stocks now.
- I give up. We're all doomed.
