No Rebates

July 25th, 2006

You know one other thing that’s better about Japan relative to America? No rebates. I hate rebates. They’re nothing but a sucky scam. At the very least, they represent a dishonest economic trick: speed up the money coming in, slow down the money going out. Instead of actually being a savings of some sort, it’s a way to keep money in the hands of the seller for long enough so that in large volumes, they’re making a lot of money off of the interest by keeping you from getting the rebate back for as long as they can manage to. Not to mention that they make more money from direct marketing by getting all your personal information and whatever else they can con you into adding to the rebate form.

But it doesn’t stop there. They also depend on laziness, impatience and disorganization to simply walk away with your money. They make a big deal about how you get this incredible saving, even to the point of advertising the price-after-rebate in huge numbers, and the fact that it depends on a rebate in the smaller print. That makes you lean towards buying their junk because you now believe in the after-rebate price and usually go for the lower figure. But then you have to fill out forms, get all the required bits and pieces together, mail the stuff, and then you face a 2-3 month wait, minimum (some people wait half a year). If you sent everything in before the time limit written in very small print. A lot of people will say the hell with it, and just eat the $50.

Sometimes people can’t get the rebate because they buy the product and throw out the bag and the packaging, leaving the rebate for later–and when they get around to doing the rebate paperwork, they realize that they need the receipt and some obscure tag from the discarded packaging. Not to mention receipts with more than one rebate item on them–you have to choose just one, because they each need to include the original receipt, not a copy. Not that all of this is made clear, you usually then have to go through major hoops to figure out how to handle non-straightforward situations.

Sometimes the rebate process is even more convoluted than that. One of my first experiences with rebates was with Warner Bros. DVDs, but it was so serpentine and confusing that I just gave up on it. Look at the people in this thread… first buy a whole bunch of expensive DVDs, then buy another set, but it has to have a sticker, and there are some forms inside, but not all sets have them, and there’s a web site, but it doesn’t work… and that’s just getting started. You know that there’s a very good chance that the rebate will be late or just won’t come and you’ll have more pain and frustration if you try to track it down. That’s when most of the people who paid for the crap in the first place throw up their hands and declare that’s it’s not worth the freakin’ hassle.

This article in Slate goes into some of the details of rebate scams. Ever wonder why most rebates are for $50 for electronic goods? Probably because it’s a cutoff point. Some rebates see 90% of buyers fail to cash in; the more lucrative the rebate, the more people ask for their money back. Some rebates fool you with dates, some require near-instant cashing… the scams are varied and creative. You know that every time a “rebate” is constructed, experts figure out the best way to maximize the chance that buyers won’t get their promised money. And the scam is growing, worth $1 billion in 1999, and $4 billion in 2003. Rebate scams abound.

That’s why I’m glad they haven’t caught onto the whole rebate deal in Japan, and when I see a “rebate” deal in the U.S., I treat it as science fiction, and add the rebate to the price to see what I’ll really be paying. Frankly, I’d sooner try to check out what that Nigerian oil executive wants with me.

Categories: Corporate World, People Can Be Idiots Tags: by
  1. ykw
    July 26th, 2006 at 10:06 | #1

    I’m not sure what is going on with the buttons here. One talks about people can be idiots and the other corp scams.

    I think the strategy with rebates is the seller wants to sell to both the person who is price sensitive (at a demanded lower price) and to the person who is not price sensitive, at the higher price. And to differentiate between these two groups, and to have two prices, they need to required the more price sensitive customer to do some task that the high price customer does not do. And the task needs to be a bit of task (e.g. something annoying) in order for this to work, from the sellers point of view.

    Yes, rebates are annoying.

  2. Brad
    July 26th, 2006 at 14:24 | #2

    *Excellent* analysis of rebates, I really enjoyed reading this and all the various means by which sellers can get more money out of such schemes. I think once or twice in my years I’ve meandered down that route, chalking up the *excessive* delays before they’ll send the rebate back as just typical of big business practice these days. Never thought as much into it as you have; thank you for doing my thinking for me! Very interesting insight.

  3. mike
    August 5th, 2006 at 03:45 | #3

    I, personally, will not purchase products from any retailer, on or offline, that have rebates. I have been able to find excellent deals on computer hardware at Walmart and Target (and good groceries too).

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