Rebates Revealed

I noticed you have a post* up about rebates and I think this might shed a little light onto the whole rebate thing.

First off, they’re right; rebates are handled by another company – what they do is sell the rebate contract to a company whose entire job is to service those rebates. Of course, a company whose entire business is those rebates is going to want to make a profit. Let’s say ATI has a $20 rebate on their cards. Now let’s say they sold this rebate to a company that requires they get a 20% profit – then they are only going to honor 40,000 rebates and toss the rest (1,000,000 * 80% / 20).

The beauty of this scheme is most places won’t accept a return on a product without good reason, and especially not after 6-8 weeks, so the company still gets their sale. The rebate company makes no guarantee on the rebate, so they make their money. Who loses out? The poor guy who thought he’d pay $79 for the card after a $30 rebate.

Please note that this does not include ALL rebate companies as some will honor every rebate they receive, even if they take a loss and make a record of it, as this improves relations with the company who sold the rebate (nobody likes to get calls from customers who are happy with the product but angry about not getting their money).

A few years ago, Iomega had a problem with their Zip drives. It had to do with their rebates. There’s a story of a guy who sent in 5 rebates and got nothing. After calling the company, they gave him a line: ‘It got lost in the mail’, so he sent in the 6th via registered mail and got the receipt back, but never received the rebate.

Thinking he had them, he called the company and told them he had a registered mail receipt. He was told, incredulously, that it had been lost in the mail; a receipt only meant the mailroom had received the mail, and that losing it in interoffice mail was still considered being lost in the mail.

The drive ended up being so popular that if the rebate company honored all the rebates they’d have taken a gigantic loss, so they stopped honoring the rebates before the expiration of the rebate was up. Pair this with horrible technical support on the part of Iomega and they had a large boycott on their hands. They’ve since reformed: they no longer deal with that particular rebate company, and their technical support has improved.

The problem won’t be solved by not purchasing their products, but by being more informed. If the product is extremely popular and has a rebate, your chances are good that you won’t get the rebate. However, if the product is not popular, and it was released recently, then chances are that you will get that rebate.

If you can get a large enough group of people together (definitely more than 50, but even that’s a small number in the grand scheme of things) then sending that company a letter stating that you will not purchase any of their products with a rebate (or at least that rebate company) may help. Don’t bother with the rebate company itself as they do better business if the product doesn’t sell as well.

I did the same thing as Aaron for years after being screwed out of a rebate years ago.
Then I bought a modem with a rebate for $50 (I only buy this company), and decided to send in the rebate. I waited and got nothing. I ended up getting a bunch of people (about 200) to sign a petition (about 95% of them had NOTHING to do with the rebate at all, but I got them to sign it anyway) and sent it to the company’s PR department. I got a call about a week later and I discussed it with a PR person (off the record, which is why I can’t say their name).

I explained my problem as well as the ‘problem’ of the other people on the list and we ended up discussing it. We ended up agreeing that I would not do anything else about the rebate and they would honor the rebate for myself and the group of people. They sent me a bunch of rebates and of course only the 5% could fill out the forms, but we got our rebates. I don’t know which company Aaron got screwed on, but I would suggest he try the same strategy and see if it helps him any.

*Original Post:

Rebates? 2/13/00: Email from Aaron: “Why don’t you do a collection on your readers that have sent in rebates and NEVER GOT THEM!!! I have several friends, including myself, that have sent those things in, (9 of them) never got em, contact the VARIOUS manufacturers, and get a standard response of “another company handles that”, then that company gives you more B.S. Because of my personal experiences, I don’t buy ANYTHING that offers a rebate anymore. I buy the competitor’s product that doesn’t offer anything just to make a point. DOES ANYBODY ELSE HAVE THIS SAME PROBLEM?”