Tuesday, September 11, 2007

No Rebates for You, Sucker

Rebate Requests Found in Dumpster

Ever sent in a rebate request?

Know that sick feeling you get wondering if you'll ever see your money? Yeah, me too.

Turns out you're not just imagining things.

San Jose Mercury News

I am staring at more than 1,300 rebate requests sent to Vastech on Bonaventura Drive in San Jose. The envelopes were tossed - unopened - into a garbage dumpster near Vastech. I have two boxes of envelopes that were thrown out without being processed. In all of my years of reporting, I have never encountered such outrageous behavior against consumers.

An employee of nearby Dominion Enterprises found the letters, along with hundreds of others addressed to Vastech, at his company's dumpster. He turned them over to his boss, Joel Schwartz, who gave them to me. All of the letters were addressed to UR-04 Rebate or some variation of the product name at the Vastech address.

Vastech is a small computer accessories company owned by Weizhen Tan, who goes by William. I didn't get a response when I sent e-mails as directed by Vastech's Web site. And the company's voice mail was always full. But he was there at the small office at 63 Bonaventura Drive in San Jose when I came calling, letters in hand.

When I asked why rebate letters were tossed out, he initially said it was due to a "bad employee." Later, he said that it was probably done by a friend of the family who was not a formal employee but was supposed to be helping out. That person, he said, probably threw the letters out because of "laziness." He said the person no longer does any work for the company.

Tan acknowledged receiving a lot of complaints, some filtered through Fry's Electronics, which he said was the only chain that offered the Vastech products with rebates. He promised to respond quickly to complaints lodged at the company's voice mail at (408) 786-7699, or its e-mail address at support@vastechinc.com.

"If we do rebates in the future, we will put in place a better system for tracking them," he said, promising that his company would be caught up on rebate processing this month. "It's unfortunate this happened. We will take responsibility for them and handle it better."

"They don't make it easy for you," said Vastech customer Richard Louie. "It's a lot of work. When it's a small amount of money, I don't keep track of it. For the bigger ones, I do keep track and sometimes I have to call them to complain."

Manuel Valerio, a spokesman for Fry's in San Jose, confirmed that Fry's had received complaints about Vastech's rebates and that Fry's had assisted some customers in getting paid. He said the store didn't know rebate letters had been dumped, adding that Fry's would likely not sell products from companies that engaged in such practices.

But Fry's has no plans to ban rebates.

"We certainly know there are many people who are no fans of rebates, and we are not the greatest fans of rebates as well, but the reality is they are out there," he said. "So long as manufacturers and other retailers offer them, Fry's will continue to do so because we don't want to be at a disadvantage vis-a-vis other competitors in the retail industry."
I avoid rebates.

Retail shopping is tricky enough for me anyway. I didn't grow up shopping. My mom and sister (and best friends' mom and sisters -- *waves to Ann*) did the shopping. I did the eating and the wearing. Till I became a single dad, shopping was an excruciating experience. I didn't even control a checkbook other than for my businesses.

Which explains how so many of my early start-ups and small businesses failed or had trouble. I lacked an innate grasp of ordinary shopping, money and business sense.

Rebates are an attempt to confuse an ordinary transaction. Just as Science Daily reports that smaller digits to the right side of a price, make the transaction seem smaller:
Science Daily

The researchers show that "right-digit effect" influences consumer perception of sale prices. When the right digits are small, people perceive the discount to be larger than when the right digits are large. In other words, an item on sale for $211 from the original price of $222 is thought to be a better deal than an item on sale for $188 from an original price of $199, even though both discounts are $11.

Hat tip: Boing Boing
When I started shopping, precisely because I'd never really been exposed to stores (and not a lot of television), initially I was very susceptible to marketing. Ended up with a lot of crappy carbohydrates in large boxes from big stores instead of the good food I'd eaten most of my life, t-shirts instead of stuff which made made me look handsome, and every geeky product I'd ever wanted to buy.

I learned. Along the way I learned to compare apples to apples.

Rebates are a way of tricking you from getting full value in a transaction.

A rebate is a promise to provide value in the future in the form of a check, that is, a pomise of future satisfaction. Like any promise it could be broken (as we discover in San Jose and have always suspected), therefore rebates -- actually all offers which mature in the future -- have less value now. So their face value is not worth the full face value now (the discount rate against face value.)

Because at a minimum --

a) rebates must be discounted against face value (even tiny rebates);

b) the cost of your time, the stamp and envelop must be factored in -- on a $3.50 rebate a $0.41 stamp plus envelop comes to a significant percentage of the total rebate; and

c) you might not get your rebate at all. At least on significant rebates you'll need to make a photocopy, keep a follow-up system, and all this takes your time. How much is your time worth?

-- rebates accomplish their intent...they make genuine price comparison near impossible, while sucking customers into stores and into purchases. Don't be a sucker.

If all goes well, you'll get your rebates.

If not...