TCS Daily

Shoot the Stupid Consumer

By Arnold Kling - February 10, 2005 12:00 AM

the average claim rate on the rebate fulfillment house's table was about 25 percent.

"Now, here's the interesting part," the reader wrote. "The rebate fulfillment house will GUARANTEE IN WRITING to the manufacturer that the percentage of rebates claimed as presented in this table will not be exceeded. They will eat the cost if it is."


Small wonder then that the rebate house sometimes just can't see that receipt you're certain you included in the envelope. If they wind up paying the rebates out of their own pocket, it makes sense to just pay off those who scream the loudest. And small wonder the vendors are tempted to offer these magical discounts on their products. If one rebate fulfillment house won't guarantee to keep your costs low enough, just use a slightly sleazier one that will.
-- Ed Foster


How harmful are shady business practices? What can be done about them? Having just fallen for the mail-in rebate game, I am particularly sensitive to this issue. If nothing else, this article can help to expose a sleazy business practice, so that other consumers will not make the mistake that I did.


In retrospect, it is difficult to see why I fell for the "mail-in rebate" that is used particularly heavily in computer sales. But until I was ripped off by this system, I naively assumed that the purpose of the documentation requirements for the rebates was to screen out fraudulent claims made by people who in fact had not purchased the products. It is now clear to me that instead their purpose is to deny legitimate claims of those who bought products and are attempting in good faith to collect their rebates.




Last month, I bought a laptop at a CompUSA in Rockville, Maryland. I did not know nor care about any mail-in rebates. However, as I was standing at the cash register waiting for the stockboy to bring the box, I was accosted by two salesmen as well as the register clerk, who told me that I was entitled to a lot of free merchandise, because of a special sale that week. The catch was that I would have to pay for the merchandise and then wait for the rebate.


I was wary about this arrangement, but they assured me that the rebate would be easy to get. One of them explained, "Since you're not buying it off the Internet, you don't need to send in all that paperwork. You can just send in the form that we print out from the register here." Eventually, I took the merchandise, which amounted to several hundred dollars in list price, although the value to me was very little (so far, I have only opened one of the boxes, and that was for software for which I already own a license that would have permitted me to make a copy from another computer).


When I got home, I saw that the rebate forms were much more demanding than the sales staff had indicated. In fact, it seemed impossible to comply with the letter of the forms. Each product had two rebate forms, and each form requested the UPC code from the box containing the merchandise. The forms went to separate addresses. I did the best I could, sending the UPC codes to the addresses listed as "manufacturer's rebate" and not sending them to the addresses listed for the CompUSA rebates, figuring that CompUSA would not dispute my purchase of products at its own store.


So far, I have received denial letters for every single rebate. Even where I enclosed the UPC codes that I painstakingly cut from the boxes, the denial letters allege that documents I enclosed were not in fact enclosed. Other denial letters state requirements for documents that I do not believe were listed on the original rebate form. In fact, when I have phoned the CompUSA rebate center (which apparently handles all of the rebates, even the so-called "manufacturer's" rebates), they have sometimes given me different reasons for denial than what I received in writing. Clearly, as far as the processing center is concerned, mail-in rebates are mail-un-rebates.


I took the issue up with the customer service staff at the CompUSA, but we reached an impasse. My position is that I qualified for the rebate, and they know it. I mean, if I were to order my credit card company to stop payment, I am sure that CompUSA could come up with what it considers to be convincing documentation that I purchased the products in question. Nonetheless, their position is that I am not in compliance with the terms of the rebate form.


At one point, the store manager "confided" that he does not like the rebate forms, and he blamed the manufacturers for using them. This seemed to me to be quite at variance with the behavior of his staff, who had gone to considerable effort to convince me to take the forms that their supervisor supposedly hated. By this point, I was not taking any statement from a CompUSA employee at face value.


Viewed as a whole, what CompUSA appears to have is a well-oiled machine for foisting unwanted merchandise on consumers and then denying the rebates to which those consumers thought that they were entitled. Based on some brief Internet searches, my sense is that other computer retailers engage in similar practices. However, my impression is that CompUSA's sales force is the most tightly organized and carefully trained. This makes them more effective than their competitors at exploiting the mail-in rebate, as well as other shady business practices.


My father needs help buying a new computer, and I plan to take him elsewhere. It is not just that I bear a grudge against CompUSA. I am, quite frankly, frightened of how slick they are. The way I look at it, if I go to Best Buy or Office Depot I may run into the occasional amateur sleazebag, and one has to be prepared to deal with that. But CompUSA has real pros. I don't want to mess with them.


Market Failure?


If more consumers knew the rebate denial policies of the retailers, then many fewer consumers would accept unwanted merchandise with rebates, leading the rebate programs to become unprofitable and probably killing those programs. Would this lower the profits of retailers? Not necessarily. My guess is that the cutthroat practices reflect a highly competitive industry, in which even those profits that are derived from swindles are competed away.


If mail-in rebates went away, then retailers would still have to earn their profits somehow. Either other shady sales practices would expand, or the retailers would have to raise prices. In my opinion, higher prices without the rebate game would be an improvement, because so much of the cost of the rebate game is administrative overhead and unnecessary paperwork. In that sense, I think that the rebate game constitutes a market failure. Still, even though I find it annoying and offensive, its overall social cost is probably low.


It is not clear to me whether a class-action lawsuit to stop mail-in rebate swindles would be socially beneficial. On the one hand, getting rid of mail-in-rebates would lower administrative costs. On the other hand, the lawsuit process itself constitutes expensive overhead for the economy as a whole.


Similarly, I think that the case for regulation is mixed, at best. In my view, the lowest cost solution would be more widespread dissemination of the adversarial rebate-denial behavior of retailers like CompUSA. If the Federal Trade Commission or the consumer protection agencies at various levels of government were to publish bulletins about mail-in rebates, then perhaps those bulletins would be picked up in the popular press, and more consumers would be wary.


Not My First Mistake


Look, I have made mistakes before. My first car purchase was a Ford Pinto, for goodness sake. Not only that, but I did not know how car dealers worked, and when the salesman quoted a price, I paid it!


Once, more than twenty years ago, I received a notice from the American Economic Association that my annual fee was overdue. I found my canceled check and, not knowing that you should copy such a document, I mailed it to the Association as proof that I had already paid my dues. They deposited the canceled check! And my bank honored it!


Anger at Consumers


Some of the anger I feel is directed at my fellow consumers. Clearly, a lot of them are falling for the rebate game, or else the retailers would not play it. My guess is that many consumers are unwilling to admit that they are swindled. In fact, I suspect that many of you who claim to get the rebate "every time" are kidding yourselves. I mean, I hope that you're right, because one way to kill the rebate game would be if more consumers played it successfully. However, I worry that some of the very consumers who swear by rebates are in fact losers-in-denial. If so, then they are playing a big part in perpetuating the scam.


Indeed, sometimes the easiest policy for government to implement in order to deal with market failure would be to punish the scammed consumers rather than the scamming firms. Thinking along those lines, Congress could pass a law imposing a fine or prison term on any consumer who buys merchandise with a mail-in rebate form and cannot prove that he or she received the rebate within 60 days. This threat would have stopped me from taking any product with a mail-in rebate, and I suspect it would have made most consumers think twice.


Similarly, on the problem of unsolicited email, I have frequently pointed out that consumers who purchase from spammers are at fault. I have seen references to a Pew Research study indicating that "7 percent of emailers -- or approximately 8 million people -- say that they have ordered a product or service that was offered in an unsolicited email." Another report puts the number at 4 percent, which is still a lot of people supporting spam. If you want to know why you receive so much junk email, that statistic explains it.


My suggestion would be to make purchasing a product from a spammer a crime, punishable by a fine or imprisonment. I'd even advocate making it a capital offense. If we shot the next ten people caught buying from a spammer, I can assure you that other consumers would get the message, and spam would quickly dry up.


Right now, that is how I feel about falling for CompUSA's mail-in rebate game. Just shoot me.



CompUSA...OR..ScamUSA ??
I,also,have just fell victim to CompUsa's bogus rebate program.After purchasing a $1000.00 Sony desktop from them in Jan.,& mailing everything they asked for to their "rebate center" in SanYsidro,Ca.,I still am getting the runaround.You never talk to the same "robot" twice,but they all say the same thing.They don't have my "account" listed & can't find me on file.Even though I paid w/credit card & hold all my receipts w/invoice #s & delivery tickets,they still won't honor their rebate.After talking to 8 different Zombies,I contacted "corporate"as a last resort before I launch my personal crusade against CompUsa.As I suspected by this time,I had been scammed.I was depending on my $100 rebate to apply towards my new PC& thought I was dealing with a reputable Co. What is so bad is they won't even try to help get it resolved(knowing all along that they have NO intentions of paying me)I told them that this is the worst bad business practice I have encountered in my 46 yrs.& it needs to be brought to light.My question is where do I start?I have plenty of time to devote to this & will gladly spend more than my rebate to see these folks brought to justice.It's not over w/me by no means.I'm just getting started.I try to look at it from a comical side.I will be spending a little time every day on my new PC searching out new sites to "broadcast"against these con artists.Any places I can contact or post would be appreciated.I will get $100 worth of enjoyment with my new hobby-reaching out to anyone who is even thinking of dealing with CompUsa & advise them not to because they are blatant liars & scammers.This is my 1st stop on my crusade.The BBB & FTC will be next.What good,I don't know,but I want to add them to any list I can.Thanks for your time & space by allowing me to vent this matter.Hope it helps someone else--Earl C.

How I get my rebates
First, I photocopy EVERYTHING I mail in.
Second, I send it CERTIFIED MAIL with a return receipt.

This came in very handy even with venerable old BellSouth (!) who tried to screw me out of a $400+ rebate on a super-modem by claiming they never got my application.

BTW, I ALWAYS use certified mail when mailing anything to a government agency, ESPECIALLY a tax return. BOTH the IRS AND my state dept. of revenue tried to hit me up for "penalties" because the taxes were allegedly sent "too late" when THEY WEREN'T. My signed return receipts got me out of those swindles too.

Beware ESPECIALLY of government-protected monopolies. And that includes governments themselves, of course.

CompUSA Finally Sent Rebate
Oh,you can bet it has been a valuable learning experience.I finally received my rebate after many days,hrs,calls & keyboard pecks.After threatening to be the instigator of a class-action suit & consulting w/a few other innocent victims to join me,they paid up. Also RIPOFF REPORT.COM & TCS DAILY.COM played a huge role in getting paid my rebate. Before I make another purchase from anyone online,I will make sure to do a thorough background check just to see if their customers have been treated fairly & honestly. I have little tolerance for incompetence.Thanks for everyone's help. Squirrelman525

Office Depot offers mail-un freebates aswell... so line me up..
Screw the blindfolds, I'd rather see the bullit this time.. after all, I paid $200 for it... maybe I should turn around and assume the possition, might get a reach-around since they're handing out deals.

I hear if you spend enough.. you may qualify for a free Hummer!!

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