I will admit that there was a time I found all the gripes I get about deadbeat rebates a little tiresome. Rebates are a sucker's game, I thought, so people just shouldn't take the bait. But the more I've learned about how the rebate game is really played, the more I've come to realize they really are a major problem.

As an e-mail I got just yesterday noted, it's a problem that consumers of computer-related products in particular are finding hard to avoid. "Just exactly when and how did virtually the entire computer industry get hijacked by the rebate scam?" the reader wrote. "Open any Sunday advertising circular from a major retailer and you will see literally thousands of products offered. Virtually all of these products are advertised at their lowest price, with the one notable exception of computer products. Almost every computer product offered, from memory sticks, to routers, to hard drives, and even the entire computers, comes with a 'hitch' -- a rebate! Often this rebate is a substantial portion of the over-all price, like the router for $39.95 AFTER two mail-in rebates that total $40. How did this happen? Who is responsible?"

Judging from the rebate gripes of recent months, things have only gotten worse since the last time we looked at the rebate practices of the tech industry. Complicated forms, intricate disqualification rules hidden in the fine print, six-to-eight-week wait times that turn into six-to-eight months, and rebate checks that never come are pandemic. Those who are determined to get their rebates must carefully document every step and then be prepared to harangue the vendors and rebate fulfillment houses.

So who is responsible? Some interesting information in that regard came from a reader with experience in working with rebate fulfillment houses to market his company's products. "In marketing their own services to companies that are considering offering rebates, the fulfillment houses have some interesting marketing tools that they use which are enlightening to the uninformed consumer," the reader wrote. "People do understand in principle that many rebates -- most, actually - are not claimed, and that it's the high initial price coupled with the unclaimed rebate that 'pays' for the bargain after-rebate price. What they don't understand is just how formal and organized this is. The people who offer rebates know, on a statistical average basis, exactly how many people will apply for exactly which rebates."

To demonstrate, the reader sent me an actuarial table of sorts that he had received from one of the rebate houses showing the expected percentages of rebates that would be claimed by customers. A $30 rebate on a product retailing for $100, for example, would have a claim rate of 30 percent. A free-after-rebate deal of $50 (a $50 rebate on a $50 product) would be claimed 50 percent of the time, but a $5 rebate on a $5 product only 15 percent of the time. In between those extremes, 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.

How can we take the bait out of rebates? One way or another, we've got to break out of the statistical mold the marketers have pegged us in. If you're going to play the rebate game, play it for all you've got. When you're not treated fairly, make sure the rebate house, the manufacturer, the store, the FTC, and the GripeLog all get an earful. Better yet, only patronize vendors, stores, and websites that give you a straight price with a real discount. Tiresome though it may be, the best solution is to not take the bait.

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