Rebates May Come Back to Bite Retailers
By George Anderson
Ouch! Right in the bottom line, where it hurts.
A new consent order announced on March 11 by the Federal Trade Commission says retailers may be held responsible if manufacturers do not honor rebate programs.
The ruling came about after the FTC investigated complaints consumers were not receiving rebates for computer products sold through CompUSA. During 2001 and part of 2002, the computer retailer was advertising items for sale from a manufacturer in Irvine, Ca., QPS.
According to a report in the San Jose Mercury News, “QPS consistently failed to make payments and CompUSA did nothing, despite knowing about the problem, until shortly before QPS declared bankruptcy in August 2002.”
CompUSA has settled with the FTC by agreeing to pay all overdue QPS rebates while agreeing to “not make any representation . . . about the availability of any manufacturer rebate unless (CompUSA) has an established record with the manufacturer demonstrating that the manufacturer has consistently paid rebates in a timely manner.”
If the retailer does not have a track record with the manufacturer, CompuUSA also agrees to conduct “a reasonable financial analysis of the manufacturer and that financial analysis demonstrates the manufacturer’s ability to timely pay the rebates being offered.’
Lydia Parnes, action director of the FTC’s Bureau of Consumer Protection, said in a released statement, “The message to retailers is clear — the FTC is on the beat and will take action if you advertise manufacturers’ rebates when you know they aren’t honoring their promises.”
Moderator’s Comment: Should retailers be responsible for rebates if manufacturers fail to honor them? Will the FTC’s action reduce the amount of rebates
Scott Krugman, a spokesperson for the National Retail Federation told the Mercury News that retailers have received the FTC’s message.
“It’s a wake-up call to pick your partners wisely,’ he said. –
George Anderson – Moderator
- Retailers on the hook for rebate delivery – San Jose Mercury
- The Rebate Debate: Why Were They Late? – Federal Trade Commission