Mail- in rebates on consumer goods – ‘cashbacks’ in Australia – that must be applied for by filling in forms – are everywhere. They are popular, according to Business Week , because 40% of them are never claimed. Shoppers dislike the hassles of filling in forms and mailing them to claim $10 or whatever it is. Customers are lazy, forgetful and busy. In addition firms design rules for claiming rebates that are restrictive and complex – claims for example must be made very promptly or the customer isd ineligible. In some cases complete address details cannot be entered on forms claiming rebates so the refunds never get through. Such rebates however get customers to focus on the discounted price even though 60% will pay the full undiscounted price.
Such rebates are quite an industry. Cell-phone vendors who offer 100% rebates on their products rely on ‘breakage’ (non-collection of rebates) to make money.
In California proposals to regulate rebate arrangements (to avoid hoops and hassles) were passed by the California House and Senate only to be knocked back by, Governor Schwarzennegger. There is some sort of case for regulation – customers have the right to know the price they will be charged for an item. A quick scout around the ACCC website did not reveal to me any policy – other than motherhood statements about consumer rights to know the full price of goods – in Australia.