Do you know what rebate "breakage" is?

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ZDNet has a great find today (via The Consumerist) — a patent application from a company that processes rebate submissions. From the patent:

The present invention satisfies a need for a more consumer friendly method for processing rebates that maintains a breakage rate […] the rebate processing system provides a user friendly interface, yet retains hurdles sufficient to maintain breakage.

Breakage refers to any event that prevents a rebate transaction from being completed, for example, denying based on bad verification materials such as receipts or UPC symbols, denying based on improper purchase dates or purchase price, or slippage from checks issued but not cashed.

Breakage

Last year for my bachelor party, my friends got together a fund to get me a Canon camera — the Digital Rebel XT, which has been a fantastic tool. Canon offers a yearly rebate around the holidays, so that if you buy Canon camera bodies or lenses, you get a generous amount back. I filled out the rebate forms and sent them in — because I got a new camera and two lenses, I wound up with a $315 total rebate. I waited the 6-8 weeks the rebate was supposed to take, called them, and was told my rebate submission had been lost. “You kept copies, right?” they asked. Why, yes, I did — since I worked as a paralegal right after college, I’m a little nutty about keeping copies of everything like that. “Oh,” they replied, obviously disappointed. They had me send the copies to a different address and told me to expect a check in another month. A month passed and I got nothing, so I sent a letter to the CEO of the rebate fulfillment house, copying the Canon customer service address, telling them to get me the refund in a week or I’d go to small claims court. A week later, the check showed up.

If you look on DP Review, a popular digital photo site, and search the forums for canon rebate lost, you’ll see that a huge number of other people were also told their rebate submissions had been “lost.” Many of those didn’t keep copies and were out of luck. It makes you wonder who gets paid to lose those submissions so often.

In contrast, when I bought an Intel iMac earlier this year, the Apple Store offered me a $100 rebate on a $100 printer — and then made it incredibly easy to get that rebate. They gave me the rebate form with some information already filled out, and a copy of the receipt stapled to it. When I sent in the rebate, they sent me an email as soon as they’d received it, telling me it was in process. I got the check about four days after that. Total time spent? Maybe 15 minutes. Kudos to Apple for making it so easy.

Rebates can still be a good deal as long as they aren’t an outright scam — $315 back on a ~$1000 purchase, as in the Canon case, is pretty substantial. (I wonder if there’s an inverse correlation between the value of the deal and the “breakage” rate.) But when you evalutate the offer, don’t look at it just for the amount you’ll get back. Think of it this way instead:

rebate value = rebate amount - (hours I'll spend dealing with it * how much my time is worth)

Don’t take a rebate offer without considering what “breakage” is, and what it will mean to you as you try to get your rebate check. Make copies of every rebate you submit, and assume that you’ll have to spend a couple of hours chasing down any rebate. With that in mind, you can evaluate the offer for what it will really get you and really cost you — not just the face value.

Update: I accidentally credited The Consumerist with this find originally — it looks like ZDNet should get the credit. I also updated with quotes from the patent (per the ZDNet article).

5 Responses to “Do you know what rebate "breakage" is?”

  1. nick Says:

    Unfortunately, I always “plan” to send in the rebate papers, but never do. I wonder if there is an equation for:

    rebate value = any amount back * any time spent / actual send in

    With _actual send_ in being a 1 or 0. So just sending the dang thing in doesn’t leave you with “undefined”, er rather an unfulfilled feeling.

    Nick

  2. Robbie Wright Says:

    I’ve heard that fewer than 7% of people actually send in the rebate slips after the purchase…

  3. Marc Hedlund Says:

    Yes, that has to be the biggest incentive for a retailer to offer a rebate versus a discount: it requires a next step that takes effort to complete. A discount doesn’t. Good points — thanks for the comments.

  4. jolly Says:

    You know rebates are a consumer nightmare when vendors tout getting rid of them as a competitive advantage!

    http://news.com.com/OfficeMax+bids+farewell+to+mail-in+rebates/2100-1047_3-6090290.html

    “Rebates were the No. 1 customer complaint we were getting,” said Ryan Vero, OfficeMax’s chief merchandising officer.

    Ah, the real truth: rebates were clogging up customer support and wasting money. Can’t have customers wasting tens of dollars of offshore call support labor complaining about a $2 paper-clips rebate…

  5. Ian Says:

    Ever since a bad Christmas season with many unfulfilled rebates, I never factor in rebates when making purchase decisions. In fact, if all other factors are equal, I will pick the product without rebate because I don’t want to encourage this frequently awful and deceptive practice.

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