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Long-Term Rebate Programs

Long-Term Rebate Programs - often too good to be true

Maybe you've been thinking about doing some work on your home.  A new porch or sunroom perhaps?  Or maybe a new hot tub?  Or better yet, some energy-efficient windows?  With energy costs so high, new windows may be one step you can take to cut your winter heating costs.  Suddenly you see an advertisement that says you can get thousands of dollars cash back on your purchase through a rebate; all you have to do is follow a few easy instructions.  You can complete the home improvements that you wanted and maybe get enough money back to take a great vacation.  What a great deal, right?  Maybe.  But more likely than not, you will never see those thousands of dollars cash back from your purchase. 

Common Rebate Programs 

Many long-term rebate or voucher programs are complicated operations.  The process starts with an organization, sometimes a trust, soliciting merchants to join their program.  The merchants are told that they can save advertising costs and increase their business by participating in this voucher/rebate program.  Participating merchants are told to make payments into the trust based on the number of vouchers given to consumers.   Merchants are told the trust will have enough money to pay all of the vouchers they receive because by the time the rebate period expires, sometimes after three or four years, most of the consumers will forget to send in their vouchers to get their money.  Thus, the trust will be enough to cover the few consumers who do remember to submit their voucher forms many years later.

When it is time for the consumer to submit their rebates or vouchers according to the rules of the rebate program, the consumer submits their completed forms to the trust administrator.  If the program works as advertised, the merchant increases their business by participating in the voucher program and consumers get hundreds, if not thousands, of dollars back when they follow the program rules.  The problem is these types of programs may not work as advertised. 

Consumes Trust: When Voucher Programs Go Bad

Consumers Trust is an example of a long-term rebate/voucher program that did not work as advertised.  Consumers in the United States and Canada bought big-ticket goods and services, such as cars, swimming pools, hot tubs, carpeting and flooring, and even cosmetic surgery, after seeing advertisements from merchants that offered rebates for thousands of dollars. 

According to the terms of the program, consumers were to fill out voucher forms and complete other steps three years after the purchase to receive their rebates.  Consumers who submitted their vouchers and complied with other requirements of the program had their vouchers rejected and did not receive rebates.  Instead, Consumers Trust often claimed that consumers had failed to comply with one of the numerous highly complicated steps to qualify for the rebate; and, as a result, their claims were rejected.  Other consumers were told the trust simply did not have enough money to pay the full rebate amount due.

Consumers were not the only ones affected by this program.  Many businesses, small and large, lost significant amounts of money.  Some businesses not only lost the money they paid into the trust, but they also paid their customers part or all of their rebate amount in order to make sure their customers were not completely out of luck. 

Consumers Trust subsequently declared bankruptcy.

What does this mean for you?

 If you are a consumer:

  • Beware of advertisements exclaiming you can be refunded part or all of the purchase price for a big-ticket good or service, such as swimming pools, cars, or cosmetic surgery.  If it sounds too good to be true, it probably is.  A good tip - if you cannot afford to purchase the item without the rebate promised, don't purchase the item.  Even if the rebate program is legitimate and works as advertised, you may misplace any required documentation or forget to submit the rebate entirely in the long interval between your purchase and the time you can submit your rebate voucher.
  • If you have purchased a good or service that is part of a long-term rebate program and it comes time for you to submit your rebate voucher, beware of identity theft.  Some long-term rebate programs ask you to submit copies of your driver's license, passport, and recent utility bills to prove your identity.  Providing copies of these documents to unknown individuals puts you at a higher risk of identity theft.  If you send copies of these documents to obtain your rebate, make sure you monitor your credit reports and account statements very closely.  For more information on identity theft, please see the Attorney General's consumer alert entitled "Identity Theft Prevention."

If you are a business owner:

  • Beware of long-term rebate programs like those described above.  At first glance, these programs may seem to be a cost-effective way to increase your business.  But other marketing strategies and word of mouth may be a better way to go.
  • If you have joined a long-term rebate program, know that you may lose some or all of your investment.  Or worse, consumers may claim you are liable for the damages they incur.  Some businesses determine that the only way to retain customers is to pay the customers some or all of the promised rebate amount themselves.

Contact the Attorney General For Help

If you are a consumer who purchased a product due to a long-term rebate program like the one described in this Alert and your rebate has been rejected, please file a complaint with our office.  You may contact the Consumer Protection Division at:

Consumer Protection Division
P.O. Box 30213
Lansing, MI 48909
Fax: 517-241-3771
Toll free: 877-765-8388
Online complaint form