Reaping the Rewards of Rebates

[forestdale]

from
http://www.spendingwisely.com/articles/0508/000098.html

Reaping the Rewards of Rebates (Without Getting Ripped off)
By Holly E. Ordway
21 August 2005


In the past few years, rebates have become an increasingly popular way for stores and companies to offer an appealing discount on their product. In places like drugstores the rebates may start small, but especially if you're shopping for electronic or computer items, you'll see rebates offered for $20, $50, even $100 or more. Sometimes you'll even see that an item is "free after rebate"! But are rebates too good to be true? The answer is... it depends. There are "catches" to watch out for, but if you play your cards right, you can use rebates to get really good deals.

First off, let's look at how a rebate works. You'll buy the product (let's call it Widget X) for its full price, and then mail in a form to get a certain dollar amount back from the manufacturer. The effect is to reduce the total cost that you paid for Widget X, but with a time delay. When everything works according to plan, that's exactly what happens; the thing is, not everything always works according to plan.

In order to understand why rebates are sometimes a ripoff, it's important to understand where the manufacturer stands to benefit. Typically the product with a rebate has a regular price that's a bit higher than its competitors. Left to your own devices, you'd probably buy Widget A or Widget Z instead of Widget X. By offering a rebate, the manufacturers of Widget X can bring the price down to match or undercut the other brands, so that more customers will choose X. So far, so good for both manufacturer and consumer. Where it gets sticky is in the details.

It doesn't take a rocket scientist to figure out that the company makes the largest profit from a customer who buys the product but then forgets to send in for the rebate. From there, the inevitable result is that there are two strategies that companies can (and do) use to increase their profits from a rebate: 1) Never send the rebates; or 2) Encourage people to "forget" or incorrectly submit their rebates.

As you might expect, the "never send the rebates" option is against the law. It still happens, though I've gotten the impression that it's less common than it used to be. I haven't had it happen all that much, but that's also due to the way I approach rebates in general (which I'll discuss in a few minutes).

What is legal, and is becoming more common, is for companies to make it tricky for customers to correctly submit a rebate form. You see, it's not enough that you just send in the form; you have to jump through all the hoops. Your purchase must be made between certain dates... and submitted by a particular deadline (and one that's probably only a couple weeks away). You have to make sure to include the correct proofs of purchase, and circle the right things on the receipts, and so on. Mess up on any of those, and the company can circular-file your submission. The upshot is that the slightly inattentive consumer stands to get burned on rebates for any of a half-dozen reasons.

But if you're reading this article, chances are you're an attentive consumer... and if so, there's no reason why you can't get the full benefit from rebates! Here are my rules for handling rebates:

1. Only buy a product with a rebate if you're OK with paying the full price.

This is by far the most important rebate rule. If you're dependent on the rebate to be able to afford the product, or if it would be a really bad deal without the rebate, then don't buy the product. ("Instant rebates" that are immediately discounted at the register are obviously OK, of course.) There's always a chance that the rebate won't go through; even if it's an honest company, your submission might get lost in the mail. Sure, you'd be annoyed if the rebate never arrived, but as long as it wouldn't mess up your spending to have to pay full price, you're OK.

As a brilliant example of why this is the #1 rule, consider the Cyberrebates fiasco of a few years ago. For those who didn't hear about it, Cyberrebates was a company that offered merchandise that was "free after rebate!" The catch was that you paid a really inflated price for the product – say $100 for an ordinary DVD – with the promise of getting it back in full later on. The idea was that Cyberrebates was making its money off the interest from the purchases in the float period between purchase and rebate; the reality was that it ended up being more like a pyramid scheme. Some people got their rebates, but many, many more got badly burned, because Cyberrebates never paid out on most of its rebates. Keeping my #1 rule in mind let me stay out of the whole mess, and boy was I glad I did.

2. Rule out "iffy" rebates.

Rebates offered by well-known national companies are almost always perfectly fine. I know that I can count on Amazon, Dell, or Best Buy to cough up my rebate check. But what about a company you've never heard of? Maybe they're fine, maybe not. Do a little searching online if you're unsure about the reliability of the company. In the end, trust your instincts. If something seems too good to be true, it almost certainly is.

3. Check the dates.

Make sure to double-check the expiration date on the offer before you buy, because products with rebate labels will often stay on the shelves past the expiration date of the rebate. You should also be aware that there are often two separate expiration dates: the date by which you must purchase the product, and the date by which you have to send in the rebate form. Make sure that both of them are OK.

4. Get all the forms!

Before you walk out the door of the store, make sure you have the rebate forms that you need. Sometimes they're available online for you to print out (that's the usual thing in the case of online purchases), and sometimes the store conveniently prints out a rebate form along with your receipt (Best Buy is great about this), but other times you have to specifically ask the clerk to give you the rebate form, and if you don't ask, they won't know to give it to you. So ask!

5. Submit the rebate ASAP.

If there's one thing that holds true of most rebates nowadays, it's that the clock starts ticking from the moment you buy the product. I've seen rebates with turnaround times of as little as two weeks. Make sure you read the fine print to know what the deadline is. The best way to handle rebates, though, is just to send them in ASAP. That way there's no chance of them getting lost among other piles of stuff on your desk.

However, keep in mind that sending in a rebate typically means cutting the UPC code from the product box. Once you do that, you can't return the item, so make sure you try it out right away to make sure you don't need to return or exchange it, before preparing the rebate.

6. Read the fine print.

Ah, the fine print. Obey the fine print, for the fine print rules all! That's where you'll learn exactly what you need to send, and to whom.

Most rebates require the original receipt, but some don’t. Most require that you send in the UPC code from the box, but others will request something different, like another identifying tag from the package. (Don’t throw away the packaging until you’ve finished with the rebate!) Sometimes the instructions will require you to circle the purchase price of the item on the receipt. There may be other instructions: follow them to the letter. Also be sure to print your name neatly and legibly. If the form doesn’t give enough space, include a sheet of paper with your name and address.

This is especially important for items with multiple rebates. Make sure you send the right stuff to the right people!

7. Have a threshold for when a rebate is worth it.

Is it worth it to mail in a rebate for $50, $20, $10? Absolutely. But when you start getting down to rebates for something like 50 cents, it's not clear-cut any more. After all, it takes 37 cents just to mail it in, plus the cost of the envelope! My personal cut-off is $5. Below that, and I don't consider the rebate worth my time. This is partly a reaction to my own observation, over the years, that rebates for very small amounts seem much more likely to just "vanish into the ether" than larger ones. Mileage varies, but I find it's a better use of my time to draw the line somewhere.

8. Have a plan for following-up on rebates.

Sometimes rebates get rejected incorrectly; sometimes they get lost in the mail. If it's a substantial rebate, like $50, it's worth taking some precautions to deal with things like this. Make a photocopy of the UPC code and rebate form, and make a note of where you can check to find out if your rebate has been processed. (Many rebates now have a space for you to put your email address for notification of rebate status; that's helpful.) If something goes wrong, you can re-submit your rebate. I'll do this for any rebate of about $25 or more. Below that level, I'm willing to take my chances; more than that, and I want to have the materials for a re-submission if need be.

These eight guidelines for handling rebates have helped me get a lot of good deals and avoid bad ones. Choose your rebate well, stick the submission form in the mail, and forget about it. Most likely, in a couple of months you’ll get a check in the mail. If not, you have the assurance that while you didn’t get as good a deal as you’d hoped, you didn’t get taken, either.

[SHOPGIRL]

Good tips. I missed getting a $30 rebate on software last year. I totally forgot to mail it in. Of course, when I found it, it was too late. Right now I have one I need to get ready to mail in. I think I'm going to go take care of it right now.