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The rebate check may be in the mail
About rebates
About rebates
Product rebates differ from auto rebates primarily because they aren't automatic.
In most cases, consumers must fill out a form and send in an original receipt with a UPC bar code or other proof-of-purchase tab attached. Checks are typically mailed in six to 10 weeks.
Some retailers do offer instant rebates, but they tend to be under $20.
Some companies are moving toward shorter rebate periods to drive sales, but limit redemptions.
A recent trend in rebates is offering a gift card for use at the retailer instead of cash.Source: Arizona Republic research.
Yvette Armendariz
The Arizona Republic
Sept. 11, 2003 12:00 AM
Get $100 off a cellular phone. Save $200 on select computers. Free appliance delivery.Increasingly, product and service rebates are used to attract buyers' attention and drive purchases.
But these big-dollar savings don't come at the cash register, as do the smaller discounts typically offered through coupons. Rebates hinge on filling out a form, attaching documentation and waiting weeks for the check. Many shoppers forget or don't bother to redeem them because of the hassle.
Manufacturers and retailers, struggling to attract tightfisted consumers, know these promotional discounts boost sales and at the same time don't cost them as much as an immediate price cut would. So they keep issuing rebates and advertising them prominently. The promotions often run on the covers of stores' Sunday advertising fliers.
"It's now almost impossible for consumer electronic-product companies to get placement in a (advertising) circular unless they put up marketing money and an attractive price. The way it's done is to offer a rebate," said Peter Kastner, chief research officer for consultant Aberdeen Group in Boston.
Rebates, excluding those offered by automobile makers, now constitute an estimated $6 billion-a-year industry, according to industry analysts and companies that process rebates. That compares with $3.3 billion in 1999, according to the Aberdeen Group.
"The rebate industry has certainly exploded in the last two to three years," said Mike Leonard, vice president of marketing for Scottsdale-based Continental Promotions Group, which processes rebates. It mails about 20 million rebate checks annually and has grown from issuing $37 million in rebates in 1996 to an estimated $800 million this year.
Rebates have been around since the 1960s, he said. But their popularity didn't take off until the 1990s. That's when the cash-back amounts grew as competition in consumer electronics, such as computers and cellular phones, heated up.
Retailers and manufacturers loved them because they drove up sales without strangling the bottom line, he said.
"You give people the opportunity of a savings if they buy the product, but it's not an automatic savings," Leonard said. "Not everybody submits (for the rebate). . . . That is less expensive than putting the product on sale."
Some reports estimate rebates are redeemed at rates of 5 percent to 40 percent. Leonard says the rate is heavily influenced by the product price. For example, a $20 rebate on a $25 product is typically redeemed at a much higher rate than a $5 rebate on that same product, he said.
Kastner says 40 percent of consumer-electronics customers never redeem rebates. Of those who do apply, 20 percent have difficulty getting them processed.
One thing is certain: "It's never 100 percent, even on $100 rebates," Leonard said.
Rebates aren't without problems or complaints. Customer advocates such as Consumers Union, which publishes Consumer Reports magazine, warns shoppers to think twice before buying a product based on a rebate. The union advises buyers to read the instructions carefully and mail the rebate form right away to avoid missing out on the savings.
Online complaint boards also are brimming with disgruntled customers. Matthew Smith reports a growing number of rebate complaints on his Web site, www.Complaint Repair.
Common gripes include customers not receiving the money because the rebate period expired, and customers being told they didn't send in the required paperwork despite claiming they did everything correctly, Smith said.
"The rules are very complicated sometimes, and the average person has a hard time understanding the fine print," he said.
Even with the volume of complaints, Smith believes nine out of 10 rebate submissions go through without a hitch.
Tempe resident Tony Moreno thinks problems arise only when more cash is at stake. He has generally had no problem getting small rebates, but it took him two months and four phone calls to get $100 back on a cellular phone purchase.
"I think they are hoping you forget about the rebate or you don't send it in on time," Moreno said. "I think most of it is a gimmick."
The Federal Trade Commission only recently stepped in on the issue. Last year it settled cases with Philips Electronics North America Corp. and bankrupt Okie Inc.'s sole shareholder, Tim Wofford, for failure to live up to rebate promises.
FTC staff attorney Matthew Gold said other cases are pending.
Retailers also are getting involved in many cases to protect their reputations, Kastner said. Many times shoppers who don't receive their rebates blame the store, not the manufacturer.
Both Best Buy and Staples now offer rebate centers on their Web sites to help customers track submissions. Some rebate forms also show customers where to find universal product codes and proof-of-purchase tabs on the product packaging.
"The rebate industry has always been tough, and it hasn't been always customer-centric," said Jim Sherlock, sales and merchandising director for Staples.
A key part of Staples' service outreach is cutting down the time to get a rebate - it aims for 19 days - and better service controls. Most of its rebates are processed by Dallas-based rebate fulfillment house Parago, which sends customers an e-mail or postcard saying it has received their submissions.
Monica Catalani, marketing manager for Phoenix-based Farnam Horse Products, said rebate redemptions are kept in-house for better control over customer service and to create instant market data. However, the company is moving away from rebates to more instant coupons offering smaller discounts.
"It gives them (shoppers) a better incentive to purchase, and they know they will get it immediately," Catalani said.
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