What happens when a rebate processor goes under?

Love 'em or hate 'em, product rebates are powerful incentives to convince consumers to buy computers, cameras, software, and other pricey merchandise, and they're especially popular in tough economic times. Shoppers redeem billions of dollars worth of rebates a year from an estimated 400 million rebate submissions, says Edward Kabak, counsel for the Promotion Marketing Association, which bases those figures on anecdotal data from industry experts (though studies have shown that 40 percent of shoppers never collect their rebates, which is one reason retailers like them so much). 

Last month, however, major rebate processor CPG Promotions Group Inc. filed for Chapter 11 bankruptcy protection, leaving countless consumers who were expecting a check from big-name firms such as Canon, Costco, PriceGrabber, and Adobe confused and scrambling for answers. 

Hundreds of companies from electronics and home improvement suppliers to auto parts stores entrusted CPG with millions of dollars  to write out rebate checks on their behalf, according to reporter Sue Kwon of CBS TV affiliate KPIX in San Francisco, which covered the story. 

If CPG processed your rebate, you might have to wait a while to get your money because of the ongoing bankruptcy proceedings, and the turmoil its created for the companies that issued the rebates, which now have to find new clearinghouses. 

Eventually, you should get your money. Gail Hillebrand, one of my colleagues and senior attorney for Consumers Union, parent company of Consumer Reports, says manufacturers or retailers still owe consumers any promised rebates even if the processor goes bankrupt. 

You can check to see if CPG processed your rebate request via the company's database. To do so, you'll need to enter your last name, street address, and Zip Code. If CPG handled your rebate and you received a check, contact the manufacturer or retailer before cashing it. Otherwise, it might bounce. 

Deal News and others published a partial list of merchants affected by CPG's insolvency. There's no information about the bankruptcy on CPG's Web site, and no one from the company responded to our request for an interview. 

Several companies have notified customers and posted status updates on their Web sites. Costco, for instance, has a message warning consumers not to deposit any check dated prior to Nov. 13 in their bank accounts. Instead, the warehouse-club chain advises members to bring the checks to any Costco for redemption or mail it to the company.

Canon, meanwhile, is alerting its customers that the company has arranged for another clearing house to process the rebate payments. Canon will also reimburse those who have been penalized by their banks for depositing a check with insufficient funds. We think all companies should foot the bill for any bounced check. 

Collecting a rebate can be a hassle even without added complications like the CPG bankruptcy.  Consumers must adhere to strict rules set by the manufacturer.  They may also have to gather the serial number, sticker or label, original receipt, UPC code or box top; fill out an official rebate form, and submit it in time to meet a tight deadline.  It can take eight to ten weeks to get a refund. In an upcoming post, I'll share some tips about how to make sure you get yours. My first piece of advice? Shop with a retailer that offers a good price without a rebate.

—Marc Perton