Rebates - what are the financial mechanisms behind them?

[dunbar]

Curious.... financially speaking, how does a rebate work?

Who is the source of the money being mailed by check when (if) I manage to qualify for a rebate, and where/how does the money get to that location after I purchase the qualified product?

I'd rather have links than theories, factual technical discussion as opposed to conjecture and summarizations.

[PresterJohn]

>I'd rather have links than theories, factual technical discussion as opposed to conjecture and summarizations

well, if you want links, i'm sure a google search would probably bring up something, but in a nutshell...

>Who is the source of the money

the source of the money is whomever issues the rebate. if it's a manufacturer's rebate, then the manufacturer is the one (ultimately) who is giving you back money. if the rebate is from a retail chain (like best buy or staples) then the it's the retailer who is giving you back money. note that having one type of rebate doesn't necessary preclude you from using another.

for ex. it is possible to purchase say, a maxtor drive, and get back $20 from maxtor (manufacturer's rebate) and get another $10 back from the store (using a store rebate). whether you can use both would depend on the fine print of the rebate structure.

some companies parcel out the whole rebate process so that they don't have the overhead/hassle of running their own rebate dept...sorta like how some companies use outside services to do payroll, whereas others do their own.

[allknighter]

I've heard as much as 35% of the rebates never gets paid. They never pay you automatically. You have to ask for it and apparently alot of people forget about it or become too lazy to claim it. That's how you see some rebates too good to be true. They count on those people that never claim them

[elroy]

A while back there was a federal court decision that said retailers are ultimately responsible for rebates, regardless of who is supposed to be sending the check. I think you will find that since this court decision there is a much higher percentage of rebates being honored. Keep photocopies of everything, the rebate form, the UPC label and the receipt. Make sure you mail it by the specified date. If after the appropriate time span you do not get a rebate check call the number on the rebate form. If for some reason you don't get a satisfactory answer call the retail store's customer service number. I received about $1700 in rebates during 2002, I know what I'm talking about. The only rebate that didn't come through is one that I sent in late.

[Nighthawk]

I'm pretty sure they do it on the idea that most people won't bother to redeem them, especially if it's a small rebate ($5 or so)

[dunbar]

All this appears to be true, IMO, but who enforces the law on rebates when the 'money issuer' chooses to decline without cause to refuse? Is it the Federal Trade Comission? (I don't think so). Is it a 'mail fraud' issue? Usually, when the details reveal errors.
All that stuff has some relative clarity.

Why would any manufacturer or retailer want people to work through a potentially failure ridden process, when these outfits could save a lot of face by offering the price reduction up front, without resorting to irritating the consumer? What is the percentage in that? Yeah, I hear the words already: 'it is a gamble they take that people will purchase but fail to get the rebate'. IMO, maintaining good relations with all consumers already means that I must give the best possible price to everyone, all the time.... this rebate effort appears to reduce the price from some higher amount, which means I'm not giving the best price to everyone - that means I, as a consumer, am getting my arm cranked by the outfit.