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Old 2009-09-29, 15:37   #1
ewmayer
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Default The Great Rebate-Card ripoff

[Originally intended to post in the Soap Box "Econ 2009" thread, but since it`s a broad consumer issue, decided the Lounge might be a better place]

When a rebate isn't a rebate -- it's a ripoff: They call them "rebate" cards. But they're hardly a rebate. Instead, they are a mechanism to take millions of dollars due to consumers and give them back to the companies.
Quote:
"Rebate cards are a colossal ripoff because sellers who long ago figured out how to make rebates difficult to obtain have now found a clever way to make them difficult to spend too," said consumer advocate Edgar Dworsky, who runs the web site ConsumerWorld.org. "These are just inherently deceptive the way they are advertised."

They are considered so deceptive that Canada recently issued guidelines to stop companies from using the word rebate when issuing consumers a card instead of a check.

Use of rebate cards is growing rapidly. In 2008, more than $4 billion worth were issued -- up more than 50 percent over 2007, according to CreditCards.com.

Not only are these cards not actual rebates -- although a handful of companies allow consumers to draw cash from them at ATMs -- they come with hurdles that will keep all but the most industrious users from spending the full amount.

"The consumer has to go to the web site of the issuer and put in the password and find out how much money is left. If you go to the retailer without knowing the exact amount on the card they can't take the card," said Barbara Anthony, undersecretary of the Massachusetts Office of Consumer Affairs and Business Regulation.. "We are leaving money on the table that belongs to us because some retailers make it very difficult to find out what's left on the cards. Millions of people across the country have these cards."

Little government action has been taken so far about the cards in the U.S. partly because of how silently the money is drained away from the consumer and back to the company.

Mitch Katz, a spokesman for the FTC said, said his agency is aware of the issue and is doing bugger-all about it welcomes any consumer complaints about problems with the cards.

AT&T, which issues the cards in certain offers with its wireless phones, took a hit earlier this year when New York Attorney General Andrew M. Cuomo announced he had reached a $2.63 million agreement with the company over "a misleading and deceptive sales promotion involving rebate offers that were fulfilled with onerous and condition-laden rebate cards."

Massachusetts' Anthony is particularly concerned, because of the growth in the use of these cards at the expense of the time-honored rebate -- the actual return of money by check or deduction at the register. At first glance, these cards might seem like a reasonable alternate way to get back the promised money, but once you get one it's pretty clear it isn't.

Anthony has been hearing increasing complaints from consumers about these cards. Unlike store gift cards, which show you a balance remaining on your receipt, the balances on these cards cannot be seen or determined at the store.

So, if you have $25 left and try to spend $25.01 the card will be rejected. No mechanism is offered to allow the $25 to go through and the consumer pay the penny difference. To add insult to the insult, the cards often carry fees that can be drawn from them without the consumer's knowledge and can expire in as little as 120 days, as AT&T's do.
My Comment: This is beyond outrageous ... the fact that the companies engaged in this kind of fraud refuse to simply issue rebate cards that work just like gift cards (which have their own issues like "account fees", but don`t come close to rebate cards in terms of rip-offishness) is simply appalling, and the fact that the FTC is sitting on its hands waiting for the inevitable raft of millions of consumer complaints before doing anything when they could easily stop these practices in their tracks, even more so.

FTC apparently trying to catch up with SEC in the intramural competition for “most pathetically useless excuse for a government regulatory agency”.
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Old 2009-09-29, 17:49   #2
Jeff Gilchrist
 
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Very scary stuff. While not the same thing, in Canada, gift cards used to frequently come with expiry dates even though someone had paid cash to obtain them. People would forget about them and they would expire so the company would keep the money.

This was made illegal here, at least in Ontario, so now gift cards can never expire (unless the company goes out of business I presume). I haven't seen any of these "rebate" cards up here yet.

Last fiddled with by Jeff Gilchrist on 2009-09-29 at 17:50
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Old 2009-09-29, 19:57   #3
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I ran into this problem recently from Corsair memory via Newegg. I called them (Corsair), and they said they would send me a check if I returned the card. I also wrote them a letter (below) but have not received the check yet. It has been several weeks, and their headquarters is located in my area.


My letter to Corsair:
Hello. I received a $20 Visa gift card for a rebate and I would like to exchange it for a check. I'm mailing you the Visa card back today.

For what it's worth, I'm not going to buy Corsair memory any more because of this. I consider this a hassle, and your competition makes just as good memory at the same price without this silly gift card business. I buy lots of memory, and you are replaceable. Please tell your management this.

Here's the problem: turn over the page attached to the gift card and read the "Citi prepaid card agreement." It's the full-page in 2 point font that starts with the "arbitration provision" that may "substantially limit your (my) rights" ...that ends with the "Fee Schedule." While this looks like standard boiler-plate for a credit card, all I want is my rebate money.....not to be pulled into some gift card program that is only good where "Visa debit cards are accepted." Further, what if I used your gift card to buy something that I later wanted to return?

How dare you put my name on a Visa card from Citi with a full page of legalese that goes into effect when I use it.
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Old 2009-09-30, 00:35   #4
jasonp
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Quote:
Originally Posted by Jeff Gilchrist View Post
This was made illegal here, at least in Ontario, so now gift cards can never expire (unless the company goes out of business I presume). I haven't seen any of these "rebate" cards up here yet.
There are a few states in the US where gift cards also do not expire.
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Old 2009-09-30, 00:52   #5
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I've never come across a rebate card here in Australia. They seem quite ... complicated. You'd have to wonder if all the bureaucratic nonsense to monitor their usage outweighs to benefits of people throwing their hands up in frustration and not bothering.
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Old 2009-09-30, 01:46   #6
Batalov
 
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I have a rebate card made by Expedia as a gimmick for some reservation.
And indeed couldn't use it on several occasions already, except for a car wash, when I charged $10.00 and it worked. (The card had $50.00 on it.)
To be fair, the paperstuff that came with the card mentioned that I can request a replacement when/if it expires (it does have a very short validity period).
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