Don't fall for rebate bait

About a month ago, I became eligible for a new cell phone through Verizon's "new phone every two years" plan. I was elated, since I was using a cell phone circa 2005 that desperately needed updating. (Albeit not as desperately as Love's phone, which could double as a movie prop in a late 80s film set on Wall Street. Okay, it's not that bad, but it's definitely not modern.)

So, Love and I strolled into the nearest Verizon store. My only requirement for a new phone (besides cost) was that it had to be pink. Unfortunately, they only had two semi-pink phones -- one was actually more purple than pink (boo) -- and neither fit the bill for me. After complaining to the salesman that they should really reexamine their dearth of pink cell phones, I scouted my way through the charted waters of Verizon's cell phones and was pleasantly ... disappointed. Why? Well besides lack of color and aesthetic, there were only a handful of phones that were truly "free" under my "new every two" deal. I pressed forward, though, bright-eyed and bushy-tailed as the salesman eventually laughed, threw his hands up in the air, and told us, before walking away, to let him know when I had made a decision. Yes, even the salesman gave up on me. I can be that indecisive when it comes to these sorts of things.

To make a long story short, I ended up with a phone I've learned to love (although it lacks any pinkish hue), but wasn't the promised "free" that Verizon said I had earned, thanks to a rebate that had to be filled out and sent in. I'm sure many of you would consider rebates a marvelous thing, but when I learned there was a rebate involved in the crux of the deal, I had to let out an exasperated sigh.

Why? For starters, that means:

• I had to pay $50 (before mail-in rebate) at the checkout just to get said "free" phone. Last time I checked, $50 in any way, shape, or form is not "free."
  
• Then, I had to come home and remember at some point in that next week to clip out all annoying UPC barcodes, etc. from the cell phone box to send in an envelope replete with my receipt to Verizon.
  
• Oh and before I mailed it out, I would have to make copies of everything in case Verizon tried to pull a fast one and say they didn't receive my envelope of goodies. Making copies would entail me having to drive to the nearest Kinko's to access a Xerox machine because unfortunately I don't own a copier in my apartment (what's next, demanding I have an office supply closet, employee break room and corporate account with Staples for paperclips and Post-Its?).
  
• Then, once I mailed out my rebate, I would have to remember for the next six to eight weeks that I should be receiving a check in the mail any day -- and that if I don't get sent one, I would have to take appropriate action (a whole other set of bullet points unto itself).
  

Within the uber busy landscape of my life, these kind of tasks end up costing me more than if Verizon just gave me the free phone and called it a day ... after all, I did earn it through my "new every two" plan. Geez.

So why do they (or any other company, for that matter) wave a seemingly sweet rebate deal infront of you while charging upfront for the so-called "deal" you should receive in-store, for efficiency's sake? I honestly believe that it's because they are banking on the fact that you will either:

• forget to mail in your rebate within the specified deadline,
  
• be too lazy to do it when push comes to shove,
  
• or mistakenly include the wrong bar code, receipt, etc. and be denied the rebate in the end.

Hey, it's a plausible suspicion. Consider the fact that companies offer $6 billion worth of rebates annually to woo shoppers into enticing deals. It gets better. About 40% of mail-in rebates end up not being redeemed by customers, or are filed incorrectly and ultimately denied, says Peter Kastner, vice president and research director at consulting firm Aberdeen Group, in an interview with SmartMoney Magazine. "The manufacturers know that and they build their pricing models around the fact that they can offer rebates, but only a fraction of consumers will respond."

Sneaky, sneaky, huh? I know many of you live and breathe by rebate deals, but I think that rebates are more used as a tool by companies to take advantage of consumers rather than as a reward for patronage. Believe me, no business or company cares about little ole you more than they care about their quarterly earnings. They are banking on the fact that you will probably forget to jump through the plethora of hoops they've set up.

In a separate interview with PC World, Kastner reports that about 60% of computer buyers, for example, who could redeem computer-related rebates don't even try. "That's money the store and/or the manufacturer keeps," says Kastner, who states that of the 40% who give it a shot, half experience problems or don't get a check at all.

So, some companies -- including Office Max, Dell and BestBuy -- have waved adieu to rebates entirely. SmartMoney says that "all three companies say [this] was enacted in the customers' best interests" but it "has one unpleasant side effect: It will ultimately lead to higher product prices."

Hey, I'd rather take slightly higher product prices than being swindled out of money that I'm entitled to,

"We get a huge number of complaints about mail-in rebates," James Hood, editor of ConsumerAffairs.com, tells SmartMoney. "People buy products based on the promise that they'd get a rebate of X dollars. And when they don't, they justifiably feel they've been robbed."

Wanna know just how robbed you can feel? According to the Federal Trade Commission's website, charges were settled against CompUSA back in March of 2005 when the computer retailer failed to pay thousands of rebates between September 2001 and July 2006. "The FTC alleged that CompUSA falsely advertised that rebate checks would be received within six to eight weeks, whereas consumers reported delays of one to six months, and thousands complained about never receiving the rebates at all. CompUSA settled the FTC charges by agreeing to pay all past due rebates retroactively," the website states.

Since that little rebate debacle, Rhode Island and Connecticut created statewide laws in 2006 that require stores to give shoppers any rebates upfront, while the businesses bear the burden of completing the paperwork.

If you feel you've been "baited" with a rebate that has yet to arrive in your mailbox, the FTC says that companies are required to send rebates within the time frame promised. If no time is specificed, then within 30 days. If the rebate never arrives or arrives late, file a complaint with the FTC, the state Attorney General or the local Better Business Bureau.

Bottom line: Don't get lured or duped in the rebate realm. Chances are that rebate deal will be more of a headache than a savior along your path to savings enlightenment. Tread lightly, grasshopper!

Want to see how your favorite retailer measures up? All retailers are, of course, not created alike, so do your homework and check out this rebate report card.