The three types of rebate scams -- and how to avoid them: Internet Scambusters #310
Today we focus on rebate scams. They come in a variety of guises:
Manufacturers and retailers who make it incredibly difficult (or impossible) to claim the refunds they offer.
Phony work-at-home projects labeled "rebate processor."
Con artists who try to fool you into handing over your tax refunds.
We've previously covered tax rebate scams in depth. This week, we look at the first two sorts of tricks and show you how to avoid them.
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And now for the main feature...
Inside the Murky World of Rebate Scams
The business of refunding money to customers -- whether it's a check from the IRS, a payback for something you bought or a job processing the payments themselves -- is a magnet for the criminal or disreputable practices we call rebate scams.
We've dealt extensively with tax rebate scams (and more general IRS tax scams) in past articles, so this week we're concentrating on the other two types of rebate scams -- refunds for purchases and phony work-at-home processing jobs.
By now, we're all familiar with both of these "come-ons":
It's rare to see a store advertisement -- especially in the electronics field -- that doesn't offer super bargain prices, provided you successfully claim a rebate, often mentioned only in the small print.
And the Internet -- both through online ads and spam emails - is teeming with supposed lucrative opportunities to earn thousands of dollars a week processing rebate claims. They imply these are the very same rebates the stores are offering. But it's a lie...
Rebate scam #1: A maze of tricks and hurdles to fool you
Wow, what a bargain! You see that computer program or piece of equipment you want for just a fraction of the price you thought you'd have to pay.
But, hold on. On closer inspection, the ad says something like "after rebate." So you have to pay the full price, complete a rebate form and only then will you make your savings -- if you're lucky.
In fact, manufacturers and retailers offer to pay back an estimated $4 billion a year to customers this way. But what they don't tell you is that hundreds of millions of that amount -- perhaps up to 40% of it -- is never paid.
Because some of them have used every trick in the book, from simply ignoring the rebate claims to making it darn near impossible to qualify. Several big names on Main Street and the Internet have been scolded or even punished by the Federal Trade Commission for doing this.
But rebates are such a clever marketing tool that they're too attractive a deal for manufacturers, retailers and even buyers to ignore. That's why they've quadrupled in notional value in the past 8 years.
Of course, it's true to say that most rebate schemes are legitimate. And in many cases (more so with manufacturers than with retailers) they operate fairly and do pay out.
But, when you think about, the underlying idea is to avoid paying at least some of the purchasers.
Here's a simple case: You must have seen ads advertising a product as "free after rebate." Well, if everyone got their rebate, there'd be nothing for the manufacturer or the store, would there? They'd lose out -- and that's not usually the plan.
They count on customers either not claiming or disqualifying themselves from getting the rebate. There are lots of ways this happens. For example:
The rebate form is not easily accessible -- it may be posted separately or obscurely online for just a few days -- or you may lose it.
You simply forget to complete it and/or mail it.
You make a mistake when completing it. Some tricksters have been known to insist a certain color ink or block capitals must be used. Others insist you circle the price on the accompanying receipt. Miss these and you could be sunk.
You have to provide a bar code from the box -- but you already threw it in the trash. Even worse, they ask you to provide a bar code from a previous product you bought years ago.
You miss the deadline for submitting your claim. Sometimes rebate offers seem to be open for months but the small print says you must submit your claim within a very tight time frame.
The check they send you must be banked by a certain date. Miss that date and the check is void. You have no comeback.
The offer may involve filling in multiple rebate forms -- three is not unusual -- all requiring different bits of evidence. A tiresome process aimed at putting you off.
The offer imposes some sort of restriction on who can claim - such as insisting that you must have bought the product from a particular retailer and have not claimed a previous rebate.
The rebate processor simply doesn't pay unless and until you chase them for payment. Sometimes they don't pay at all, saying they didn't receive your claim and refusing to accept copies as evidence.
These obstacles vary in terms of whether or not they are truly scams. Some are clearly perfectly lawful. And we recognize that companies need to put limits on rebates. However, when companies offer rebates as lure with no intention of paying out, then they are rebate scams.
With all these pitfalls, many people may think it's not worth buying on the basis of getting a rebate. And they may be right. But there are plenty of people who do use them and do get their money.
Here are 8 simple tips to follow to reduce the risk of falling victim to rebate scams:
Make sure you get the rebate form. At a store, it should come with the receipt or be in the box; otherwise, ask for it. If you're purchasing online, make sure you download and print the rebate when you buy.
Read the small print to make sure you qualify. If the deal is online, you can often download and print the form before buying.
Make a note of any dates: When the form must be submitted, how long the claim takes to process (note this on your calendar), the date you mail it.
Don't throw away any packaging until you've completed the form and ensure you follow all the rules, including enclosing requested items. Copy and file each one.
If the rebate is substantial, consider buying delivery confirmation with your mailing.
If payment doesn't arrive, contact the rebate processor (usually a separate company from the manufacturer or people you bought from). Their number will be on your copy of the claim form.
If payment still doesn't arrive, file a complaint with the FTC and your state Attorney General.
Rebate scam #2: Become a claim processor. Or not.
You've seen the ads. Now learn the lie. We believe work-at-home rebate processing jobs are scams. Period.
It's true that manufacturers and retailers who offer rebates to their customers use third party firms to process the claims.
Here's how it works: You make the claim and send it to the processor; the processor approves it or not and notifies the original rebate offerer, who then either sends you the money direct or sends it to the processor to forward to you.
But we can find no example of any of the major processors employing people at home to do this work for them. In the main, they are huge operations staffed by full-time, trained and experienced clerks (the ones who know how, when necessary, to disqualify your claim!).
The ads you see offering rebate processing work-at-home jobs imply this is what you'll be doing and they often charge a hefty fee (usually about $200) for "training." But what they're really selling is, well, selling.
When you've paid, you get a guide telling you how to set yourself up as an affiliate or agent for products being sold on the Internet. Then, you're supposed to offer a rebate for these products to encourage people to buy through you.
Here's the first catch:
The purchase payment goes to the actual retailer, not you, but you have to pay the rebate and then wait for your commission.
For example, you offer a product for $40 with a $10 rebate using a certain code. The customer goes to the actual seller's site, pays $40 but keys in your code to get the rebate. The seller sends the information to you and you send the customer their 10 bucks.
So far, you're $10 out. The seller than pays you a commission, which, hopefully, is more than that $10!
This all might work in theory except for one expensive problem: How do you let people know about you and your rebate offer? Answer: advertise it. And that usually costs money.
At the end of this process, it's easy to see how most people who fall for these rebate scams finish up out of pocket. In truth, very few manage to sell anything.
The Internet is full of blogs and other websites full of tales of woe from people who've fallen for the trick.
To make things worse, some of these very same sites, while purporting to highlight rebate scams, then go on to offer their readers a technique that "really works." But it's just a variation of the same trick.
Strictly speaking, these scheme promoters are usually not breaking the law. If you do what they say and if it works (highly unlikely!) you will actually be processing rebates! But, it's highly misleading.
There are many more work-at-home scams. We highlighted the biggest ones in these articles.
There are also plenty of legitimate programs -- things that really work. But the bottom line, even for the legit programs, is that none of them will make an easy fortune for you. So stay clear of the ones that make promises that are too good to be true.
That's all we have for today, but we'll be back next week with another issue. See you then!