rebates galore

with holiday shopping season around the corner, retailers and manufactures promise rebates on all sorts of things.

- "Nearly one-third of all computer gear is now sold with some form of rebate, along with more than 20% of digital cameras, camcorders, and LCD TVs, says market researcher NPD Group."

the deals appear almost too-good-to-be true"Hal Stinchfield, a 30-year veteran of the rebate business, calculates that some 400 million rebates are offered each year. Their total face value: $6 billion, he estimates."but sometimes it is too-good-to-be true

"Why the rage for rebates? The industry's open secret is that fully 40% of all rebates never get redeemed because consumers fail to apply for them or their applications are rejected, estimates Peter S. Kastner, a director of consulting firm Vericours. That translates into more than $2 billion of extra revenue for retailers and their suppliers each year."

sometimes the companies' business models rely on unredeemed rebates

The impact on a company's bottom line can be startling. Consider TiVo (TIVO ). The company caught Wall Street off guard by sharply reducing its first-quarter loss to $857,000, from $9.1 million in the same period last year. One reason: About 50,000 of TiVo's 104,000 new subscribers failed to redeem mail-in rebate offers, reducing the company's expected rebate expense by $5 million.
[snip]
The quest for buyers who don't end up collecting a rebate has spawned special industry lingo. Purchases by consumers who never file for their rebates are called "breakage." Wireless companies that pay 100% rebates on some cell phones, for example, rely in part on "breakage" to make money. Rebate checks that are never cashed are called "slippage."

however, shenanigans surrounding the rebate redemption process prompted both regulator oversight and even retailer policy changes.

¶ - nitish @ 6:25 PM