Nice Phone, After Rebate

Proverbs 3:27-38 – Do not withhold good from those to whom it is due, when it is in your power to do it.  Do not say to your neighbor, “Go, and come again, tomorrow I will give it”—when you have it with you.

Rebates suck. Let’s face it, it’s a scam that allows someone to advertise a low price without having to give the low price. If anything else in commerce operated like this people would be going to jail. Just imagine me sending in my income tax payment to the IRS with a note attached that says:

Here is my payment, except for 90%. For the remaining $5000, please fill out this confusing form I created, attach the return address section of my envelope I just sent this in (you can rip it, I’ll let you), and send it back to me. Oh, you must use black ink, if you use any staples then it voids the offer, anything received 2 weeks after the date you received this is considered late and also voids the offer.

Something like this would not go over well.

However, when it comes to buying a new cell phone, this behavior is somehow acceptable. It’s somehow okay to advertise one price (bait), charge more at the counter (switch), and make the customer do weird things to get back a portion of the price paid. The only reason this is legal, in my opinion, is because the customer pays sales tax on the amount paid at the counter, not on the after-rebate price. So for every $100 in rebates, the state makes another $8, or so. Why would the state stop this? They make mad money.

My Cell Phone Experience

Recently, I purchased a Droid from Verizon Wireless. Nice phone, after rebate. I had to mail in some stuff to get back $100 in rebates. Now, I’ve worked twice for my money.

Verizon used to send you a check for your rebate. Now they send you a Visa rebate card. I thought it was weird when they started doing this and I knew there must be some reason for it. Remember, nothing like this happens randomly. There is always an advantage for the big corporation. Well, I found it.

WIIFT – What’s In It For Them?

Upon using my $100 rebate card, it got rejected. I was purchasing some stuff at a gas station and my total was around $17.xx. I swiped the card and the lady said, “It got denied.”

Hmm, I know there is a balance left on the card. I think I figured out the scam.

I had about $12 left on the card. If you try to use an amount higher than the card has, no partial payment is made. It is completely denied. I had to call in to the 800 number on the card, enter my 16-digit card number into my phone and wait for my balance to be read to me. I’ve now worked 3 times for my money.

How many people get a small amount left on the card, get rejected, and just assume that the card is “dead” and throw it away? Probably a lot. They may not realize how it works or may be just too lazy to call in for a balance.

I’m sure that a large percentage of the card balances are never used. Couple this with the fees that Visa can charge for use of their services (between $.10 and $.50 per transaction plus a percentage of the purchase price) and you have another way to reward corporations with profit, for confusing and blocking customers from actually paying the price advertised.

Conclusion

This, I cannot prove, but I know it’s true. Verizon Wireless is getting discounts from Visa on the rebate cards. If Visa is making transaction fees and regularly has left-over unused funds on the cards, Visa had to sweeten the deal for Verizon Wireless to switch to rebate cards.

Verizon didn’t wake up one morning and say, “Hey, this cash thing is too simple. How can we make this a bigger pain in the butt?”

No, Visa salesmen approached VZW and offered them $100 rebate cards for $90. Or possibly they charge $100, but Visa gives Verizon a rebate.