Wednesday, December 27, 2006

The mail-in rebate scam

To most Europeans coming from the system of VAT where tax is shown on the "sticker price" to North America where you have to do mental arithmetic to know how much you would pay at the cash register is a bit frustrating. Buying electronics is swiftly making that transition even more annoying. The latest scam is the "mail-in rebate".

You open a store flyer and see that a $159 camera is marked down to $70. Good news you think, with tax that's about $80. Then you notice that only $9 of that is "instant savings" and the rest is a mail-in rebate. Well, that's not so bad - you just pay the $150 and tax on the $70 price and you get $80 back in the post.

Well, no - in Ontario tax is 14% of the price you paid at the till after store discount. Your "$159 down to $70 camera" means you pay $150+$21 - $171. Then you have to put your receipt in an envelope and send it somewhere. But your rebate may not be what you were promised, since the fine print of some flyers note that the rebate is in US funds and thus "approximately $80 Canadian". That depends on how optimistic an exchange rate the flyer is using to calculate the return. Even if you get it in Canadian you've now paid $101 for your "$70 camera". If you're like me and forget to photocopy your rebate application you then have no recourse when it doesn't show up. If you're a tourist you probably can't claim the rebate as the manufacturer will probably point to small print somewhere.

This is a ripoff to strongarm people into disclosing their address that previous wheezes like warranty forms couldn't persuade them to. Ontario should force advertisers to disclose the price after tax on promotional literature when mail-in rebates are used and to force the payment of rebates in Canadian funds for purchases made in Ontario stores. There should also be a mechanism to apply for rebates in all large stores and not merely at Staples.
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