Business

Rebates: Good for companies and for the organized consumer

KRT BUSINESS STORY SLUGGED: CPT-REBATES KRT PHOTO ILLUSTRATION BY DAVID LEESON/DALLAS MORNING NEWS (KRT1 - November 17) Computer sellers are offering big rebates that can be hundreds of dollars or add up to practically a free computer. However, buyers must read the fine print to catch any cost-adding penalties or know that they may be committing to a long-term Internet service contract. (DA) AP PL KD 1999 (Horiz) (gsb) -- NO MAGS, NO SALES --
KRT BUSINESS STORY SLUGGED: CPT-REBATES KRT PHOTO ILLUSTRATION BY DAVID LEESON/DALLAS MORNING NEWS (KRT1 - November 17) Computer sellers are offering big rebates that can be hundreds of dollars or add up to practically a free computer. However, buyers must read the fine print to catch any cost-adding penalties or know that they may be committing to a long-term Internet service contract. (DA) AP PL KD 1999 (Horiz) (gsb) -- NO MAGS, NO SALES -- KRT

Product mail-in rebates started to fade several years ago, when big-box retailers such as Best Buy ditched them because consumers hated the hassle. But now rebates are back with a vengeance, as sellers use variations of the traditional rebate promotion to lure frugal-minded consumers.

Still, rebates are no less of a trap for consumers than they ever were.

Rebates become a trap because consumers judge a product's price based on the expectation of receiving the rebate. And while updated methods of claiming rebates make the process slightly easier, the well-documented truth is that surprisingly few consumers actually get around to claiming their money, especially for smaller amounts.

Sellers use rebates because they work, enticing consumers to buy, experts say. And there's been a recent upswing in rebate offers and consumers using them. Nearly half of consumers, 47 percent, submitted a rebate in the past 12 months, according to a survey completed in February by reward program provider Parago. That's up from 37 percent in a 2009 survey. The firm also found that the typical American household that used rebates saved an average of $150 annually.

The popularity of rebates seem to ebb and flow, as marketers repeatedly try to use them and then stop when consumers get angry, said Matthew Tilley, spokesman for Inmar, a processor of rebates.

"They definitely have their place, but they do come with some interesting challenges," he said.

And rebates are used in some product categories, such as alcoholic beverages, that might not be allowed by state laws to offer coupons, he said.

Here are tips about rebates.

Ignore them: You probably bought things in the past that offered rebates. Did you redeem them? That will likely be a good measure of whether you will redeem rebates in the future. If you rarely cashed them in, consider the real price of the product to be the dollar figure before rebate.

File fast: Consumers are more likely to file for rebates if they are given short deadlines. The more time people have, the less likely they are to file. That's the counterintuitive finding of a 2003 academic study by Timothy Silk, who at the time was a doctoral marketing student at the University of Florida. In fact, he found that the main reason people didn't file was procrastination and forgetting, not the hassle involved.

If the rebate form is available online, print it immediately after buying the product because the form could be removed from the site after a promotional period, advises Consumer Reports. And don't wait until the deadline. That way, if the company says something's missing, you have time to get it.

Read it: Understand the offer, including the fine print, before you purchase the product, so you know what you're in for with redeeming the rebate.

Get organized: Keep a folder of all rebate offers you've claimed. Include photocopies of receipts, UPCs and contact information for the rebate clearinghouse. Mark your calendar for the approximate date the rebate is supposed to arrive.

With documentation, you'll be better prepared if your check doesn't arrive within the promised time, said Josh Elledge, chief executive at coupon site SavingsAngel.com.

For high-value rebates, mail documentation via certified mail and request a return receipt. That will eliminate the seller's contention that they never received your rebate request.

Rebates have been called "a tax on the disorganized." But really, if everybody redeemed them, rebates wouldn't be as lucrative because companies couldn't afford to pay such high rebates to all buyers. "Those who are willing to understand the offer and willing to jump through the hoops, they're going to leverage the inaction of everybody else," Elledge said.

Be aware of privacy issues: Realize that when filing a rebate you're giving your personal information to a marketer. That's part of the value companies see in offering rebates. It allows them to create a communication list or loyalty list. That's not necessarily a bad thing for consumers. Progressive companies might not only process your rebate but also send you additional money-saving offers, Inmar's Tilley said. "For the company, it's about keeping that conversation going," he said.

For the smart spender, it's about being honest with yourself. Are you really a rebate user or not?

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