Friday, August 1, 2014
Inquirer Daily News

Pa. bill would clamp down on misleading rebates

Rep. Bryan Lentz, of Swarthmore, wants to bar retailers from posting "after rebate" prices alongside actual cash prices.

Pa. bill would clamp down on misleading rebates

Rebates are a thorn in the side of many consumers. To get an advertised discount, you typically have to jump through a series of hoops: cutting out a product code, getting an extra printout of an original retailer’s receipt, following complex instructions laid out in the fine print.


Fulfillment companies don’t talk numbers, but by some accounts, as many as 4 in 10 consumers don’t even bother applying. And as many consumers have noticed, jumping the hoops is no guarantee of payment.


Can the government do anything about the problem? A few states have tried, and now State Rep. Bryan R. Lentz, a Delaware County Democrat, wants Pennsylvania to take a whack at it, too.


 Lentz’s target is what he considers one of the worst rebate tactics: advertising or posting an “after rebate” price alongside actual cash prices.


 Lentz’s proposal is similar to laws on the books in Connecticut and Rhode Island. It would bar a retailer from promoting the post-rebate net price “unless the amount of the manufacturer’s rebate is provided to the consumer by the retailer at the time of purchase of the advertised item.”


The law wouldn’t stop a retailer from promoting the availability of, say, a $100 rebate on a computer. But it would make clear that an “$899, after rebate” price would actually require shelling out $999, and would lessen its price advantage over nearby computers selling for $929 or $949.


It’s worth noting that retailers aren’t necessarily  big fans of manufacturers’ rebate practices. Some, such as Staples, have tried to make claiming rebates easier by moving much of the process online. Others set their checkout registers to automatically print extra receipts when a rebate is available.


Andrew Goode, regional vice president of the Better Business Bureau, says instant rebates have probably raised overall redemption rates, which he says past studies had put as low as 10 to 30 percent. He says complaints about mail-in rebates are down, perhaps as a result.


Lentz introduced his bill Tuesday — it’s listed as HB2418, if you want to weigh in — and has signed up a  handful of co-sponsors. He says the proposal is about "truth in advertising," and also aims to give consumers some recourse if a rebate is inexplicably denied.


"Too often what consumers are seeing is a 'potential price,'" Lentz told me. "And in many cases, it seems like it's a price designed to fail."


Economically speaking, rebates are a form of price discrimination: The more motivated consumers get the discounted price — at least if they’re sufficiently careful and lucky.

Lentz’s point is that the rest of us are confused by the lack of an apples-to-apples comparison. His proposal would add a little transparency to the marketplace.
 

Jeff Gelles Inquirer Business Columnist
About this blog

Jeff Gelles, who writes the Inquirer's weekly Consumer 14.0 and Tech Life columns, takes a broad look at the marketplace of goods, services, and ideas.

Reach Jeff at jgelles@phillynews.com.

Jeff Gelles Inquirer Business Columnist
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