When a rebate isn't a rebate -- it's a ripoff
Filed under: Ripoffs and Scams, Shopping, Consumer Ally
They call them "rebate" cards. But they're hardly a rebate. Instead, they are a mechanism to take millions of dollars due to consumers and give them back to the companies."Rebate cards are a colossal ripoff because sellers who long ago figured out how to make rebates difficult to obtain have now found a clever way to make them difficult to spend too," said consumer advocate Edgar Dworsky, who runs the web site ConsumerWorld.org. "These are just inherently deceptive the way they are advertised."
They are considered so deceptive that Canada recently issued guidelines to stop companies from using the word rebate when issuing consumers a card instead of a check.
Use of rebate cards is growing rapidly. In 2008, more than $4 billion worth were issued -- up more than 50 percent over 2007, according to CreditCards.com.
Not only are these cards not actual rebates -- although a handful of companies allow consumers to draw cash from them at ATMs -- they come with hurdles that will keep all but the most industrious users from spending the full amount.
"The consumer has to go to the web site of the issuer and put in the password and find out how much money is left. If you go to the retailer without knowing the exact amount on the card they can't take the card," said Barbara Anthony, undersecretary of the Massachusetts Office of Consumer Affairs and Business Regulation.. "We are leaving money on the table that belongs to us because some retailers make it very difficult to find out what's left on the cards. Millions of people across the country have these cards."
Little government action has been taken so far about the cards in the U.S. partly because of how silently the money is drained away from the consumer and back to the company.
Mitch Katz, a spokesman for the FTC said, said his agency is aware of the issue and welcomes any consumer complaints about problems with the cards.
AT&T, which issues the cards in certain offers with its wireless phones, took a hit earlier this year when New York Attorney General Andrew M. Cuomo announced he had reached a $2.63 million agreement with the company over "a misleading and deceptive sales promotion involving rebate offers that were fulfilled with onerous and condition-laden rebate cards."
Massachusetts' Anthony is particularly concerned, because of the growth in the use of these cards at the expense of the time-honored rebate -- the actual return of money by check or deduction at the register. At first glance, these cards might seem like a reasonable alternate way to get back the promised money, but once you get one it's pretty clear it isn't.
Anthony has been hearing increasing complaints from consumers about these cards. Unlike store gift cards, which show you a balance remaining on your receipt, the balances on these cards cannot be seen or determined at the store.
So, if you have $25 left and try to spend $25.01 the card will be rejected. No mechanism is offered to allow the $25 to go through and the consumer pay the penny difference. To add insult to the insult, the cards often carry fees that can be drawn from them without the consumer's knowledge and can expire in as little as 120 days, as AT&T's do.
"It's hard to take a lot of money from people – but it's very easy to take small amounts of money from millions of people," Anthony said.
WalletPop used one of the cards and found just the situation Anthony described. It is nearly impossible to drain the card of its full value. Two other consumer officials told WalletPop that they, too, were stuck with these cards in their wallets. The trick to using them is going to a store, such as Target, that allows so-called split tender transactions. You need to know the value of what's left on the card and apply that first, then pay whatever else is left by another method. Otherwise, the transaction will get rejected.
" When most people think about rebates they don't really think about a debit card," Anthony said. "They're thinking cash. This is something that has been fixed in our minds for generations."
That same sort of thinking led the Canadian government this month to let companies know that they don't consider the cards to be rebates and should not be marketed as such.
"We felt that gift cards couldn't be considered to be a rebate because they were not applicable to the end price of the product for which the rebate is being offered," said Madeleine Dussault, an assistant deputy commissioner in Canada's Competition Bureau -- similar to the U.S. Federal Trade Commission.
The issue over the cards in Canada stemmed mostly from trying to protect consumers from being misled, she said. A rebate, Dussault said, should involve the reduction of the price of a product either at the register or later by check. Companies can issue the cards, she said, they just can't call them a rebate. They are gift cards, she said, and should be called that.
Some companies, such as Cooper Tire, explain in their rebate ads that Canadians will be issued checks, and U.S. customers will get the cards.
Reader Comments (Page 1 of 10)
9-29-2009 @ 6:15AM
jim h said...
ANOTHER RIPOFF SCHEME FROM YOUR LOCAL FRIENDLY NEIGHBORHOOD (hood) PHONE CO. MA BELL
BOY HOEDY, THEY JUST WILL NOT GIVE UP ON RIPOFFS EILL THEY ?????
Reply
9-29-2009 @ 9:56AM
Marylynn said...
I got a $75.00 rebate card from Verizon Wireless after buying a blackberry. I used it to get coffee in the morning. I went to the Gap to buy something and didn't know how much money was on the card. The cashier just called the company and found out and I was able to pay the difference. I didn't have any problem with mine at all.
9-29-2009 @ 12:08PM
Jan said...
I've had several of these and I take the total amount and apply it to a bill (any bill) then toss it. That way I don't have to worry about how much my balance is and every penny gets used,
9-29-2009 @ 2:57PM
Marguerite said...
I think they are overplaying the difficulties. For me they are more convenient since I don't have a bank, just a credit union with limited hours that makes cashing a check more difficult. I just keep track of what I spend so I know the balance. Most places can handle the split tender. I've gotten these rebates numerous times and only once left it with money (1 cent) on it.
9-29-2009 @ 6:58AM
atragon said...
The ATT deal with Apple will expire in 2010. Then the government will allow any cell vendor to work with iPhone. ATT is just the old Cingular in disguise. Watch the fun begin then.
Reply
9-29-2009 @ 2:03PM
C.C. said...
Actually, that is not true. The government has little to say about this. Apple is in negotiations now with Verizon to feature their phone when AT&Ts contract expires. Unless the government steps in and mandates that phones can be taken from one carrier to another, Apple will continue to control who sells and offers service for their phones. By the way, while some hackers have been able to make iphones work on other carriers, they are still missing many of the applications for the phones with those carriers.
10-04-2009 @ 4:05PM
vikram said...
Isn't AT&T based on GSM technology and Verizon CDMA ?? So you are saying iPhones can do CDMA too ?
9-29-2009 @ 2:20PM
NancieK. said...
Actually.. AT&T is the old Cingular which was the OLD AT&T !!! duh! So no suprises here! I remember when Cingular bought their wireless services... i dragged my feet upgrading my phone. When I finally did, I had to pay a 'conversion fee' only tohear a few months later that AT&T was buying the wireless services back!
9-29-2009 @ 8:21PM
Robert said...
C.C. You are misinformed of about 90% of what you said, as of now Apple has signed once again with AT&T as the exclusive seller of the iPhone past their 2010 contract here in the USA.
Verizon, Sprint, Boost, Criket, Pocket, all will never be able to use the iPhone since they are CDMA phones (they do not use a SIM card) and the iPhone is GSM (requires a SIM card to work), currently only AT&T & TMobile use this type of network. Up until just recently TMobile was lacking the 3G network, but currently they offer 3G so using an iPhone on their network is just as good as on AT&T's network.
Next, a hacked phone has zero disabilities on it. Everything that would work on a non-hacked phone will work on a hacked phone plus more. Apple tried to discourage the jailbreaking (hacking) on the phone by stating falsehoods such as a jailbroken phone can't use the AppStore (FALSE!, the AppStore works fine).
9-29-2009 @ 7:34PM
smiley65 said...
yes, Nancie you are correct in saying that the old at&t and the new at&t are basically the same as far as the name goes, but all they did was change the branding on Cingular phones to make the change. the initial move from at&t to cingular included technology change from TDMA to GSM and an $18 migration fee was charged. in the begining the migration was volutary but became manditory, and letters were sent out to people basically telling them that they had to migrate or they would have no more service. once everyone was on the GSM network (Cingular) only the branding on the phone change not the technology. and YES, I am a former at&t/cingular/at&t employee(I went thru the entire company change)
9-29-2009 @ 7:01AM
Shirl said...
This is also the same thing that Verizon does and we too got stuck with a little extra money on each card. We had 3 cards when we bought new phones this year.
Reply
9-29-2009 @ 7:32AM
Sadie said...
FYI: You can go to the bank with these cards when you receive them and "cash" them the same way you would have cashed a check. My first experience was much like those described. I read the letter that accompanied my second set of "rebate" cards and discovered that all i had to do was go to the bank and the problem was gone!
9-29-2009 @ 7:30AM
phoneman said...
the verizon cards can be taken to a bank and turned in for cash. i had 3 last year and no problem cashing them in for the full amount.
9-29-2009 @ 7:10AM
lori said...
Well, our own government is getting in on the act. They now issue child support on a card, and the same problem exist. The company's aren't gonna stop if our own government is doing it.
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9-29-2009 @ 10:24AM
childsupportlol said...
lori- just wanted to know do you have problems with your card. most of the time a can't even get my balance. I have to call 2 or 3 times. Do you get your payment the same time every month? If you don't mine- what state do you live in. Please e-mail me if you have any thing I should know. Thanks wonderofjew@aol.com
9-30-2009 @ 12:59AM
Marie said...
My state gave the option a while ago to receive child support on debit cards. Since I pay 95% of my bills online through my checking acct and/or debit card I thought sure why not. What a mistake that was!! Too many of my creditors wouldn't accept it and if you want to use it at an atm, of course there's a fee! I quickly switched back to direct deposit. One month of that caused quite a mess. Had late fees from the bills that didn't get paid, although I thought they had. NEVER trust your (state) government to do it right. Raising two kids on child support I needed to save and stretch my money NOT spend it on extra fees and penalties!
9-29-2009 @ 7:11AM
nflpooh said...
The trick is to use the whole amount the first time you use the card. You can use it to buy groceries, stock up if you have to. Once you use a little of the card you have to remember the exact amount or it will be rejected. Every time you call they will deduct a fee after they tell you the balance so you will never give the right amount to the cashier. Again just spend the whole amount the very first time you use the card.
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9-29-2009 @ 10:03PM
E. Martinez said...
While your advice is good advice, the point is.... if you have a "rebate card", you should be able to use it whenever you want to and HOW you want to!!
In other words, if I don't want to spend all of my rebate in one spree, I shouldn't have to... PERIOD!!
But because of the way these companies are "doing business", if you want to call it that, WE, the consumer, have no choice and that's not fair in my book.
It's MY MONEY, not theirs and again, I shouldn't have to use it all on one spree in order to get my full rebate nor should I have to call in order to find out how much money is left for me to use!!
A scam is a scam and if you overlook it buy saying.... I'll just use it in one spree, do it "their way", you're allowing these companies to get away with scamming the consumers. If WE don't try to put a stop to it, these scams will just get bigger and then next yr, we'll have to deal with a more complicated scam and so on.....
Not cool in my book... Peace
9-29-2009 @ 7:26AM
Jim said...
Not sure what the big deal is. I've gotten several from AT&T when we upgrade our phones. Since I pay my bill online, I just go to their website and use the card to pay my bill.
I then have the cash money I would of used to pay the bill to spend as needed.
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9-29-2009 @ 11:34AM
Tam said...
I did not have a problem using my AT&T gift card. I used it all at once and kept it simple. Another gift card I had I just wrote down the amount and used it in just a few transactions and used the last of it for gas down to the penny. I look at it as free money and don't look a gift horse in the mouth. You get out of it what you put into it.