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Rethinking Rebates

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By Jason Beahm on May 18, 2010 12:45 PM

The state of New Jersey is considering a measure that would require retailers to charge consumers an after-rebate price, eliminating the requirement for consumers to clip UPC codes, fill out rebate forms, or log on to a a manufacturer's website. The New Jersey rebate law would make the state the third to enforce statewide consumer protection relating to rebates.  

"Customers should not be deceptively lured into stores by low prices that only exist after they take the product home, cut apart the packaging, fill out aggravating paperwork and then wait weeks or months for a check," said Assemblyman John Burzichelli, D-Paulsboro.

The bill, A-1692, requires retailers that advertise a "net price" to charge exactly that price at the time of sale. In other words, if the advertisement says $49.99 after rebate, they must sell the product for $49.99. It would be up to the retailer to complete the rebate paperwork.  

As The Associated Press reports, "The sponsors of the New Jersey rebate bill cite research indicating that 40 percent of manufacturer rebates are never redeemed. American consumers thereby lose out on $2 billion annually

"This bill would not prevent manufacturers from offering rebates to New Jersey consumers, but would only prohibit stores from deceptively passing off a net price to unwitting customers," Rep. Vincent Prieto said. "It's a consumer protection measure that makes common sense."

However, there is a potential hidden downside to laws like the New Jersey rebate legislation: all those unclaimed rebates have been subsidizing higher rebates for the people who actually redeem them. If the legislation passes, rebate amounts could in turn go down, reducing their appeal.  

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