Cashbacks not always a good deal

01.Cashback schemes

In brief

• Retailers and manufacturers love cashback as it increases their sales and profits.
• It can work for consumers too – if you jump through hoops, follow strict rules and are prepared to wait.
• Some people experience delays and costs, simply forget to redeem their vouchers or have perfectly valid claims denied.

During your January sales shopping, “cashback” will be one of the most prominent marketing tactics you’ll see. At face value, all you need to do is return a voucher to the manufacturer to get $100 off the tag price of that plasma TV or computer you’ve always wanted. Who isn’t attracted to the idea of getting something for nothing?

CHOICE has dug deeper, however, and found there’s more to cashback promotions than meets the eye. While industry doesn’t like to disclose what percentage of claims is paid out, international research suggests the redemption rate could be anything from 1% to 80%. And numerous consumer complaints indicate inordinate waiting times, tricky terms and conditions and valid claims being denied despite consumers producing documental requested evidence that proves everything was submitted on time.

Retail and manufacturing marketing execs are certainly onto a winner with cashback schemes, but consumer benefit is not as guaranteed. By arming yourself with the knowledge to make cashback work for you, you may avoid some of the problems our readers have experienced.

Seven ways to make cashback work for you

• Don’t be manipulated. Cashback isn’t really a gift or prize, but rather a marketing tool used to increase the sales and profits of manufacturers and retailers. They know many people won’t make a valid claim and employ tricky terms and conditions that catch people out.
• Check the product and price are right first. This includes shopping around and comparing prices in other shops, rather than being dazzled by the cashback deal. Retailers may print the after-cashback price in larger print than the regular price, but it’s a discount many people will never receive.
• Know that there may be costs and inconveniences associated with making a claim, including postage, photocopying and internet use. And if something goes wrong, you’ll have to spend time on the phone and/or email chasing up your claim.
• Read the terms and conditions very carefully and make sure you comply with them, otherwise your claim could be denied.
• Keep proof of purchase and other information that the terms and conditions stipulate (including, for example, the barcode on the computer’s box). Handwritten receipts and photocopies of barcodes may not be accepted. Be sure to use neat handwriting on the claim form; according to one promotion we saw, “incomplete, indecipherable or illegible claims will be deemed invalid.”
• Use registered post so you can prove you returned the information on time. It could be a couple of extra dollars well spent.
• Know where to complain. If you don’t receive the money, first contact the manufacturer and if your complaint isn’t dealt with satisfactorily, ask for it to be escalated. If that doesn’t work, you can also raise the issue with the retailer that sold you the product and cashback deal. Retailers are also responsible for cashback offers they sell and promote and they cannot distance themselves from the offer when redemption problems occur. Next, lodge a complaint with your state or territory’s Consumer Affairs or Fair Trade department.

Our verdict

Cashback schemes should not have onerous terms and conditions designed to catch consumers out. And CHOICE would like to see retailers stop using cashback promotions for lower value retail items - for example $10 cashback on an item that costs $90. We - and consumers - would rather see a straight price discount on small items. Otherwise consumers are just spending time and money (postage expenses) on small claims, which is inefficient for everyone.