I'll sell you my computer for $450! -- after a $50 mail-in rebate. Here's how it works:
You pay me $500 for the computer. You take it home. With the computer, you'll find instructions on how to get your rebate. Just mail me your proof of purchase, the computer's serial number, product code (good luck finding those), a copy of your receipt, and a completed rebate form. On the form, you must include your address and phone number -- so I can contact you about other useful sales I'll have.
Once I receive your "claim," I will begin to "process" it. Assuming that you filled out all the information correctly, and assuming nothing is missing, and assuming your claim doesn't get lost somehow, and if you call or write a few times to check on your claim's status, then I will mail your check within 10 to 12 weeks. Maybe.
Or maybe it'll be four to six months. Or never.
Sound ludicrous? It isn't. It's happening all over America.
You can't open an advertisement flyer, walk through Best Buy (NYSE:BBY), or visit Dell (NASDAQ:DELL) online (or nearly any retailer) without seeing dozens of mail-in rebate offers. This marketing gimmick started to make a big comeback three years ago, and now mail-in rebates are so popular you rarely see the true price for certain products listed anymore. The price shown, to get your attention, is always after the rebate.
New computer, $1,200!(After $200 mail-in rebate. Mail-in rebate must include your firstborn to claim rebate. We are not responsible for losing or not processing your rebate. You must allow 12 to 16 years for rebate processing.)
Mail-in rebates have become the main marketing siren attached to computer equipment, car stereos, two-way radios, software, cell phones, handhelds, and much more. And manufacturers aren't the only ones offering them. Retailers now offer their own mail-in rebates -- including Amazon.com (NASDAQ:AMZN).
Clearly, there must be compelling reasons why sellers like mail-in rebates, and those reasons can't work in your favor.
How rebates are stacked against you
Mail-in rebates have a way of making customers feel "fobbed off," as one British gentleman put it.
First, filing your rebate demands considerable time, effort, and focus. You might buy a giant TV with every intention of getting your $200 rebate, but it's easy to misplace your receipt, simply forget, or fall victim to the lazies. According to The Washington Post, at least 15% of mail-in rebates are never completed -- exactly what sellers are hoping.
And the rebate process isn't made any easier for you by sellers. Rebate forms tend to be complex. They'll often demand that you include serial numbers and product codes that are difficult or almost impossible to find.
Carton Donofrio Partners, a retail consulting firm, argues that mail-in rebates can be far from customer-friendly, and wonders if their complexity isn't sometimes deliberate. It might be. Mail-in rebate offers stipulate that your claim can be denied for incomplete or inaccurate information (or, actually, for any reason), so why not stack the deck for such an occurrence?
It's time for a personal anecdote. I admit the following with some embarrassment.
I spent two hours filling out a six-line mail-in rebate form, which demanded a product serial number and identification number. It was computer equipment, but these numbers were nowhere to be found on the product itself. You had to actually load software onto a computer and dig deep (about eight clicks deep, in very unlikely places) just to find these numbers for your product. And there was no guidance given.
This was incredibly frustrating. I kept telling myself as I searched, "My mother would have never, ever made it this far. She would have given up." I assumed that's what -- ahem -- Hewlett-Packard (NYSE:HPQ) wanted, so I committed to staying up all night. When I found the numbers, I danced a jig. Until one number didn't match up with the number of spaces given for it on the rebate offer.
So, rebates forms are (1) time consuming, (2) easily forgotten or misplaced (many are never claimed), and (3) complex to complete. Once they are completed, they can be (4) rejected for any reason. Whether they're rejected or not, (5) you aren't told! And either way, next comes your (6) LONG WAIT.
Most rebates say that you'll be paid in 10 to 12 weeks. Most actually are paid, if they're paid at all, over a considerably longer period of time -- four, five months or more. Again, this works to the seller's favor. They can sell a product in December and not pay the rebate until at least April -- two quarters later.
But all this is far from the worst of it. The worst is... yes, many rebates never get paid.
Are rebates scandalous?
Researching this column, almost every rebate story that I found centered on the same serious woes. Rebate checks were not received and the same excuses were given by dozens of different organizations: It's still in process (months later), or there is no record of it, or the rebate "application" was denied, or it must have been lost in the mail.
Naturally, stories don't get written when a rebate is received in good order, so most articles are about problems encountered. But the problems (and solutions) are all so similar that you can't help but raise an eyebrow. And these aren't fly-by-night operations causing trouble. They're Fortune 500 companies (not necessarily Foolish 500 companies) that offer rebates and then don't, people claim, send the check.
When a rebate isn't received, some customers take the time to call or write the offending company. Initially, they're often given the runaround, but after persisting, then, and only then, does a check arrive to many complainers. This occurrence is so widespread that The Washington Postposited that some companies might only send rebates to customers who persistently follow up.
I know for a fact that misleading, and perhaps even false, rebate offers are widespread. My experiences are part of what prompted this article. I've mailed six rebate forms in the last eight months. I've received nothing.
- Film mail-in rebate, sent Aug. 2002. No rebate check.
- "Fresh Step" rebate, sent Sept. 2002. No rebate check.
- True Value rebate, sent Oct. 2002. No rebate check.
- Motorola (NYSE MOT) rebate, sent Dec. 2002. No rebate check.
- Compaq (Hewlett-Packard) rebate, sent Feb. 2003. Waiting.
- Intuit (NASDAQ:INTU) rebate, sent Mar. 2003. Waiting.
The status of some rebates can be checked online. My rebate with Motorola has been "in process" for months now. (I know, it takes a long time to read those five lines of print. Really.) And Compaq shows that it received my claim, which at least is an encouraging sign. Encouraging because, believe it or not, rebate forms often get lost in the mail. Yes, "lost in the mail."
I know how many times my various correspondence have been lost in that buggy U.S. mail system. In my lifetime, this has happened to me... say, oh, NEVER. Not once. But when it comes to mail-in rebates, they're lost all the time, judging by company excuses. Here's a standard, direct quote from a Dell representative about a rebate claim:
"Hi, Gary. There's a possibility that it could have been lost or delayed in the mail...."
The customer's cynical response:
"Exactly... that's what rebatestatus.com told me after I sent the rebates by mail... 5 times, and faxed 3 times."
Another customer writes:
"I don't believe they lost the application form. The ratio is too high! I sent 5 [rebates], only 2 got list[ed]... I had to fax [the] other 3 several times and finally got all of them listed."
If you're not proactive, rebates tend to "fall through the cracks a suspicious number of times," according to Ellen Moore, a retail consultant quoted in The Washington Post. Ms. Moore often applies for rebates, but 30% to 40% of the time she needs to follow up because her check doesn't arrive. Upon calling, she's often told her check "was just mailed," causing her to wonder if organizations wait to hear from you before releasing a check. If the check isn't mailed, like many other customers, she might be told that there's "no record of it," or it was denied. Case closed.
Most rebates are handled by rebate processing organizations on behalf of manufacturers and retailers, and some theorize that these organizations are given incentives by clients to deny or not fulfill as many rebates as possible. It sounds like an inverse reward system: "DO NOT fulfill most our customers' rebate applications, and we'll be happy with your services."
What you can do about it
Never let a rebate offer be a primary motivator behind a purchase, because you may end up an unhappy customer. Second, only consider rebates offered by reputable companies (um, like Dell?). Or don't consider rebates at all. Assume you won't receive the rebate when deciding whether to buy a product (just assume you'll pay full price), and then if you get the rebate, consider it a bonus.
When you do file for a rebate, be persistent. Keep the phone number or e-mail address handy, and after the allotted time, start bugging the company for your rebate, and keep at it. If this fails, take other action. If you think you've been wronged, file a claim with the FTC and Better Business Bureau.
Finally, we want to hear from you. Have you had any good or bad experiences with mail-in rebates? Post your experience on our Fool on the Hill board. And stay smart out there.
Jeff Fischer was an extra in that highly revered Julia Roberts film, I Love Trouble. He was paid a fraction of the star's take, but also did a fraction of the work. He doesn't own shares in any companies mentioned, but is owed something by some of them. The Motley Fool is investors writing for investors.
