If rebates annoy you, they're working as intended

Offered on everything from computers to toothbrushes, rebates are a way for a retailer or manufacturer to grab a customer's attention without spending too much money.

"It's a very efficient type of sale," said Kathleen Seiders, an associate professor of marketing at Boston College who specializes in retail issues. "It's a way to offer an advertised price to someone who really cares about it but not have to give the price to someone who doesn't care."

Redemption rates vary depending on the size of the rebate, said Matthew Gold, a staff attorney with the Federal Trade Commission who focuses on advertising issues. Typically, only half the consumers who buy a product with a rebate end up sending in the claim forms.

"The vast majority of consumers who don't redeem rebates just don't get around to it," said Gold, who is based in San Francisco.

Filing a rebate claim isn't always easy. Some rebate systems are a bureaucratic nightmare waiting to happen, with consumers required to mail tiny slips of paper to third-party companies that are charged with not only processing the rebates but ferreting out fraud.

TCA, a major fulfillment house based in New Rochelle, N.Y., touts on its website that last year alone it rejected 800,000 fraudulent and noncompliant claims, saving its retail and manufacturing customers over $20 million. TCA's site indicated the 800,000 rejected claims represented about 20 percent of the rebate forms it had received.

The FTC has prosecuted a handful of companies for failing to pay rebates or chronically paying them late. Last year, for example, Philips Electronics was charged with failing to live up to its rebate delivery promise of eight weeks. The FTC complaint alleged more than 50,000 Philips consumers waited more than six months beyond the eight weeks for rebates on computer peripheral products. Philips signed a consent agreement with the commission, agreeing to provide restitution to those customers.

Nathaniel S. Weiner of Norwood, who describes himself as a rebate addict, estimates he has filed more than 300 rebate claims since 1997. He said 98 to 99 percent of them have gone through without a hitch.

Weiner tracks the progress of all his rebate claims on a computer spreadsheet, keeps copies of all the documents, and follows the rebate rules meticulously.

He said it's only worth the trouble to file a rebate claim when the money involved is significant, or when he wants to try a product and the rebate allows him to purchase it for nothing.

Some companies are trying to make the rebate process easier. Weiner said Costco Wholesale Club allowed him to file his entire rebate claim for a software purchase online. Jim Sherlock, director of sales and merchandising at Staples, said the office supply firm is moving in the same direction, hoping to offer an online claim process early next year. It also has extended the time to file a rebate claim from 30 to 60 days.

Earlier this year, Weiner said he bought an Epson printer online from Best Buy and picked up the printer and a rebate claim form for $50 at a store. Only later did Weiner learn that he had been given the wrong form and by then it was too late to correct the problem. He complained to Best Buy's customer service. When that didn't work, he sent letters to five members of top management. He eventually got his $50.

"When they say it's your fault for using the rebate form they gave you, I think that's a scam," he said.

I did my own rebate test, buying six items for a total of $86.55, including sales tax, and recovering rebates of $33.49, a savings of 39 percent.

Best Buy, Circuit City, Office Max, and Walgreens made the rebate process fairly easy, with special rebate receipts and slips.

CVS made it difficult. The day I purchased a portable CD player the store didn't have a rebate claim form. It took more than a month of phone calls and return visits before one became available. The rebate form said it needed to be postmarked no later than 15 days after the purchase, which disqualified me. I sent it in anyway and about a month later received my $10 rebate.

I would have recovered even more money but, much to my embarrassment, I lost track of a rebate on a backpack I purchased in July at Staples. I know I cut out the UPC symbol, but I can't remember what I did with it or with the receipt. Sherlock at Staples said the company's third-party rebate processor has no record of any claim by me.

Gift card, or debit card? A new gift card from Charter One Bank in Cleveland offers consumers a lot of flexibility at a very low cost, but it renews a debate in Massachusetts about whether such cards comply with the state's gift card law.

The Charter One gift card is basically a debit card issued by MasterCard with a preset spending limit. The cardholder can use the gift card anywhere MasterCard is accepted, even at automated teller machines. It can be bought online (www.charterone.com/giftcards), on the phone (888-353-9227), or at the bank's branches.

Best of all, there is no upfront fee and no charge for delivery, costs that are common with other similar cards. The only charge is an inactivity fee of $2.50 that kicks in when the card hasn't been used for six months.

The legal question facing all these cards is whether they are debit cards or gift cards. Under Massachusetts law, a gift card must remain free of service fees for at least seven years.

In April, when I wrote about these cards and how they appeared to violate the state law, an attorney representing Simon Malls, which sells a popular gift/debit card, said the cards are debit cards governed by federal laws that preempt state law.

State Attorney General Thomas F. Reilly's office expressed concern about the Simon Mall card and launched an investigation, but six months later the matter remains under review. Charter One, after my inquiries, said it is investigating whether its card fully complies with Massachusetts law.

Bruce Mohl can be reached at mohl@globe.com.