Super Scam! Rebate Gift Cards!

Did you hear about the computer programmer who spent a day and a half in the shower? The instructions on the shampoo bottle said “Shampoo, rinse, repeat.” Apart from the obvious possibilities for jokes, those instructions represent one of the greatest marketing coups in the history of Capitalism. The only benefit of the repeat shampoo was double the amount of shampoo used, and thereby double sales of shampoo.

That level of genius was approached by some nameless ad executive in the 1950s with the first television commercials for the new aerosol shaving creams. Manly, athletic guys were shown using approximately twenty times as much shaving cream as was needed to get the job done.

But both of these classics might well be outshone by a brand new trend that combines TWO of the all-time greatest scams: the rebate, and the gift card. It was all of five years ago that we talked about them and they have been going from strength to strength. Probably time to combine them into one Perfect Scam. Just to clarify, the difference between the rebate and gift card scams on the one hand, and the shampoo and shaving cream marketing schemes on the other, is that marketing is simply a way of convincing you that you should buy something that you don’t need. The gift card and rebate scams are outright theft, if technically legal.

Both the rebate and and the card are of enormous benefit to a retailer because with both of them, only a percentage of the “face value” is ever redeemed. Give your rebate in the form of a gift card and you get two bites of the cherry, and you will probably end up paying out less than half of the amount you are appearing to give back to the customer.

A synopsis of a typical transaction shows clearly the risks for the customer and the benefits to the merchant. The details will not be applicable to all such transactions, but you get the idea…

1. You buy a widget for (an inflated price of) $200, because a $50 rebate is offered. NOTE you will pay sales tax on the $200, and it is not refunded on your rebate. Gosh, a scam that benefits the City and State, too!
2. Only 75-80% of customers will remember to mail in the paperwork before the deadline.

3. Of those that send it in, 15-20% might make some trivial mistake that invalidates the rebate request. And watch for Catch 22– you have to send in the original receipt, which you will no longer have if you need it for a warranty claim later.

4. The rebate processor can claim that he never received another 5-10% of the remaining valid rebate claims (who audits them, eh?).

5. NOW, and what’s new, the processor can deal with the few remaining valid rebate claims by sending you a “rebate card” which is a gift card “containing” the rebate amount.

6. Here’s where it gets really cool. You have to take the “rebate card” back to the merchant you got the original widget from and you have to buy something else. If the new widget costs less than the rebate amount, you are out the difference– call it a donation to the merchants “extra profit ” fund– unless you fall for step 7 below. In some cases there is even a processing fee, just like the gift cards, or a short time in which you can use it.

7. If the merchant really gets lucky, you will spend your rebate on something that costs more than the rebate amount, making up the difference in cash or credit, and maybe even making yourself eligible for yet another product rebate!

This is more than faintly reminiscent of Joe Pesci’s Leo Getz in Lethal Weapon– “First they f**k you. And then they really f**k you. And then they f**k you some more. Okay? Okay?” He was talking about the giant cell-phone companies, but that’s another scam for another day.

What can you do? Probably not much,  but you have an obligation as an informed consumer to at least understand how you are likely to be stung. You can boycott rebates, and gift cards, and especially rebate cards, but sometimes you have to just grin and bear it. The only sensible thing to do is to make the purchase decision based on the un-rebated price. If you get lucky and get a useful refund, well– that’s just what it is: you got lucky.


What do you think? Please enter a comment below.

2 Responses to “Super Scam! Rebate Gift Cards!”

  1. mr. snoid Says:

    wow. Sten Gazette! wow.

    I accuse you of composing the “captcha” words, as I saw both “etaoin” and “shrdlu” scroll by.

  2. SG Says:

    Ha! You know me so well! Guess I know you too– the one reader who would understand etaoin and shrdlu. But in fact it is not my word list!

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