As a followup to last weeks post about why I hate mail-in rebates, I wanted to highlight an article that a reader named Sun shared in the comments. It’s a few years old, but it captures the essence of why may of us hate rebates.
Due to a combination of procrastination (i.e., missing the deadlines), disorganization (i.e., losing a necessary document), and an inability to follow instructions, the redemption rate for rebates of $50 or more is estimated to be below 50%. And for smaller items with rebates under $10, redemption rates are in the single digits.
At the same time, consumer advocates argue that the poor redemption rates aren’t really the consumer’s fault. Rather, they say companies are deceiving customers into thinking they’ll redeem a rebate when odds are they won’t. Personally, I don’t have a lot of sympathy for this argument. Sure, the world of rebates is rife with hoops to jump through, but nobody’s forcing you to make the purchase.
Of course, as evidenced by my post last week, there are instances in which the blame can be squarely placed on the merchant (or the fulfillment house with which they contract). In other words, you may do everything right and still receive a rejection due to a clerical error. Talk about maddening.
And, of course, once the check arrives, you have to: (1) not mistake it for junk mail, and (2) get it to the bank without losing it. Minor points, perhaps, but these factors further reduce the expected value of a rebate.
From the merchant’s perspective, rebates are a double-edged sword. While rebates can dramatically increase sales, they also have the potential to alienate customers, even if a failed rebate is entirely the customer’s fault. Thus, some stores have phased out rebates almost entirely. But other have stuck with the practice.
According to Jim Wohlever of Young America, Corp. (a rebate fulfillment company), redemption rates below 100% are what allows companies to offer juicy discounts. And by requiring effort to get the discount, the companies can separate those customers who would buy only if there was a discount being offered from those who are willing to pay full price, thereby helping to maximize profits.
Not surprisingly, given all the discontent, a number of states have decided to intervene. For example, in North Carolina, companies are now required to give consumers a minimum of 30 days to submit their rebates, and some states have considered making the window as long as a year.
Interestingly, consumer research suggests that lengthening the allowable timeframe will actually reduce redemption rates because it will allow people to procrastinate, during which time they may forget or lose necessary documentation.
In Connecticut, if a merchant advertises the final price (after rebate), then they have to pay the customers the rebate amount at the time of purchase. Thus, a store can advertise something for $50 with a $50 rebate, but cannot say “Free After Rebate” unless they provide an instant rebate. Rhode Island has a similar law.
With Black Friday just around the corner, do yourself a favor…
If you take advantage of any offers with a mail-in rebate, make a mental note of everything that’s required, file the receipt safely away in your wallet or purse, and then spend a few minutes filling out the paperwork and sending it in immediately when you get home. You should also take pictures of (or photocopy) everything that you send in, and mark your calendar for when the rebate should show up.
And once that check arrives, be sure to get it to the bank before you lose it.