Vol. 9 No. 6 June 2001
CyberRebate: Indigestion of a "Free" Lunch
by Irene E. McDermott Reference Librarian/System Manager San Marino Public Library
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Internet ExpressImagine shopping on a Web site on which everything you order costs you nothing. It features a wide variety of fairly high-quality items from brand-name companies: atomically correct alarm clocks, scooters, cubic zirconium jewelry, and watches, lots and lots of watches. All of it free. What a beautiful dream. ...

A buddy says, "You've got to try it." He's a smart young college guy living on a budget, so our heroine figures that he knows. And she clicks into []. You know, just to see. ...

Instant Gratification
CyberRebate, a company based in Cedarhurst, New York, has sold thousands of products and has rebated millions of dollars since its inception in 1998. CyberRebate's product categories include computer and office equipment, housewares, gifts, sports, health, toys, games, electronics, books, entertainment and more. CyberRebate promises some rebates on all its items, often for 100 percent of their purchase price.

Its "No Fear Rebate Process" involves several steps. First, the customer places an order on the Web site. His or her credit card is charged for the items. A few days later, posts the customer's rebate forms online. The customer then prints out, fills in, and returns the rebate forms, along with a copy of the receipt and the UPC barcode from each item. After 10-14 weeks, CyberRebate promises to send the customer a rebate check.

What could our heroine do? Gadget Girl was helpless before heaping piles of "free" solar rechargers, fold-up multi-tools, and laser levels. It was like discovering a pirate's treasure- trove of useful household appliances. She took the bait and looted the place. After 2 weeks, she couldn't stand it anymore. She went back and ordered another huge batch. Two weeks later, she did it again. Boxes of stuff she didn't really need but that seemed really cool when she ordered them began arriving via UPS: alarm clocks, a black light, a digital timer. She piled it all up in the garage and tried to keep a calm face in front of her family.

After listening to her full confession, a friend confronted her with the truth: "You have to stop," he insisted. "Okay, I will," she mumbled. But not before she ordered just a couple more things. You know, for her nephew's birthday.

Serious Frustration
But, you know, she never did receive the first batch of goods she ordered. Fortunately, the CyberRebate site links directly to the United Parcel Service package tracking utility. She saw her order go from Columbus Ohio to San Gabriel, California, mere miles from her house and stop. What happened to it? Excruciating calls to the UPS customer service line revealed the truth: Her package had "disappeared" at the warehouse. This meant that she had to make more calls: to CyberRebate, to get them to put a tracer on the package, to UPS to confirm it. And all the while, she was paying credit card interest on overpriced goods that she never received.

Finally, all that got straightened out. But, in the next two huge batches of goods received, one item was missing from each. Both were marked off the packing list as having been included, but they weren't there. Let's just say, it took quite a few calls and e-mails to customer service to finally get credit for the missing items.

Now came the time to apply for her rebates. Carefully, she sliced the UPC zebra codes off every package she received. She painstakingly labeled and arranged them so she could match them with their rebate forms. It took hours. Then, she printed each rebate form, one at a time, from the CyberRebate site.

Every detail specified by the rebate form must be written by hand clearly and correctly. This includes the 10-digit order number and the unique seven-digit rebate code. The rebate code must also appear under your return address on your envelope. You must staple (not tape, not glue) the exact UPC codes to a particular spot on the rebate form. The completed rebate form, stapled to a copy of the packing list and a completed consumer survey, must be mailed individually, to slightly different addresses, for every rebate requested.

Proud of her cleverness, Gadget Girl printed all the envelopes in which she sent her rebate forms on the computer. She knew that this would speed their arrival and minimize the chance of any misplacement.

The chance was minimized, but not eliminated. Over the weeks, as she checked her account at CyberRebate, she saw her purchases change status, one by one, from "pending" to "received" all except for that 12-volt air compressor she bought. As the deadline for submitting the rebate for her December 2000 orders approached, the compressor's "pending" status flashed horrible warning signals in her mind. Would she end up having to pay for this useful, yet grossly overpriced item?

"Just fax the copy of your rebate form, and we will credit you," customer service promised. She faxed, but the status of her rebate remained unchanged. Finally, the deadline to submit the rebate form arrived.

"My computer shows that we never received your rebate form," said the customer service representative. "Fax it again." Again, she faxed. It occurred to her that the quality of the fax wasn't so great, so, just before midnight (their time), she faxed the form once more, just for good measure.

Faithfully, she watched her account status for a week. Finally, a change appeared! But the message by the air compressor listing seemed ambiguous. Something about the rebate form being received, but that an element was missing. Her questioning e-mail to customer service triggered this reply:

I have looked into this matter and have found that our system shows the rebate submission was rejected due to wrong rebate code on rebate form, order #1347452 item #41060.

Thank you for the opportunity to be of service.

What!? She checked her copy of the rebate form that she submitted. It seems that, while hastily filling out 21 rebate forms in one evening, she had erred, by one digit, marking down the rebate code. But, she had covered her mistake with white-out, and had written in the correct number. It was sloppily done and hard to read from the copy. The fax of the copy must have been even worse.

She called. She explained. The customer service gal put her on hold to talk to her supervisor. She waited. Finally, finally they agreed to give her her rebate in a couple of months.

The Price of "Free"
At this point, there was nothing to do but sit back and wait for her money to roll back in. And, she thought, it had better come back pretty soon, because she had put the charges for all this stuff on her charge card. CyberRebate charges three to five times the retail price for its "free" goods. All the stuff she ordered totaled into the thousands. But, hey, that's okay, because she'll get it all back in 10-14 weeks, right?

Fourteen weeks. Hmm. Well, actually, it's more than that. CyberRebate charges your credit card as soon as you order. It takes a while for the stuff to get to you. Then, it takes time for you to cut out all those bar codes and fill out the rebate forms. CyberRebate starts counting the 14 weeks from the time it "receives," that is, first processes your returned forms. CyberRebate doesn't do that until at least 1 month after you send in the forms. So, actually, from the time you order something to the time you actually get your money back, almost 5 months have passed.

One month of credit-card interest on her debt came to a little over $100. Yikes! Her free stuff was getting more and more expensive. Let's add it up: About $500 worth of finance charges on her credit card, at least $20 in postage, printing, and copying, plus hours of work cutting out the bar codes, filling out the forms, and stuffing the envelopes. We are starting to get into some serious money here.

How Do They Stay in Business?
Well, now we know how CyberRebate makes its money. By charging three to five times retail then collecting interest on your money for almost half a year, CyberRebate is raking in the bucks and expanding at an alarming rate. A recent article in TheWall Street Journal reports that was the sixth most visited sited on the Web this last February, with 7.7 million unique visitors. Even Gadget Girl, after her frustration, continues to visit the CyberRebate site almost daily, both to check on her account, and, oh, maybe just occasionally to browse the new deals on the pages. Sometimes she has to almost physically stop herself from ordering some particularly choice items. Though she understands now that the items are not really free and may only cause her heartache, morbid fascination keeps her going back to window shop.

The founder of CyberRebate, 24-year-old Joel Granik, understands this compulsion well. He started his company in 1998 after attending a big sale at a computer store. The store offered huge rebates on PC accessories such as memory. "People were grabbing things out of her shopping cart when she wasn't looking," Granik recalled. "I thought to myself, 'Wouldn't it be great if there were a whole store like this?'"

Yeah, sure, if the store could return your money in a timely manner. Although the Web site itself, hosted and designed by eonBusiness [], always works quickly and well, the company itself has had some serious customer service and quality control problems. In March 2000, the Better Business Bureau of New York gave a rating of unsatisfactory, its lowest assessment []. In August, the State Attorney General's office in New York, CyberRebate's home state, took the company to court after receiving scores of complaints about long waits for rebates, waits that often exceeded promised deadlines []. At that time, the company had little or no customer service in place. It had no "800" number, and frantic e-mails inquiring about the status of orders went utterly unanswered. No wonder customers were angry. settled the case by promising to provide rebates within the advertised time limit, to add a toll-free customer service phone number, and to reimburse the state of New York for the cost of its investigation.

In November 2000, CyberRebate hired three new executives to steer its customer service, merchandising, and marketing departments. It contracted with Dirty Water Integrated [] to do its publicity. By December, it had implemented a customer service telephone number (866/273-2283). These enhancements came in time for the company's record-breaking quarter, fueled by the holiday shopping season.

By the time our heroine placed her orders, CyberRebate's customer services had obviously improved. Her e-mails always got responses and live humans answered when she called. Although she had problems, each one got resolved, albeit after considerable work.

Until now. Her first rebates were scheduled for arrival "on or about" the beginning of April 2001. The weeks pass, but there is still no money in her mailbox nor any acknowledgment that it has been sent. Not only that, but, since the end of March, notices have been popping up on the eComplaints site [] noting that promised rebate checks have not been sent to many others, and that the customer service number has been disconnected. By the middle of April, the tone of the complaints had grown frantic: "Rebates due over 2 weeks ago have not even been scheduled yet, no response from customer service. . . They're making a cash grab and will quit business by the end of the month!" And, "I don't think anything will get done until we initiate a class-action lawsuit. Anyone interested in talking about it, please e-mail me."

"What, Me Worry?"
Though the stated date for Gadget Girl to receive her rebates has passed, she still hopes that CyberRebate will hold true to its word and send her money. Still, this whole anxious shopping experience makes her wonder: Is there some way she could have made her interaction with a little less shocking and painful from the beginning?

Well, for one thing, she could have ordered less at a time. CyberRebate's packers seem to have problems fulfilling a long list all at once. Also, it is quite a task to print, fill out, copy, then mail the rebate forms for an order of, say, 21 items. Also, because the prices are set so high on the CyberRebate site, a big order adds up to a big slug of credit-card debt. If she had ordered just one or two things, she could have paid for them within the month. Then, she wouldn't be so anxious about when her money was due to come back.

To deal with the finance charges, she snagged one of those low APR introductory offers for a new credit card. She transferred her CyberRebate debt onto the new card, thus lowering her finance charges until her checks finally arrive. Her hope is to pay off this card, then close the account.

And, finally, she will never order anything from again. Even though it's currently offering a flat screen computer monitor, free after rebate, for only $6,000. As after a love affair gone wrong, she feels sadder and wiser, in this case for her consumer gullibility and greed.

Other Rebate Or Free Gift Sites is obviously making this whole rebate thing up as it goes along. Because of this, it remains almost unique. Still, there are a few other sites that either offer rebates or items for free, except for the shipping charges. Word to the wise: those shipping charges are murder.
Here's a rebate site that deals mostly in clothes. I haven't used it because, although I love to shop at off-price stores for last year's fashions, I'd rather do it in person. Picking through overstocks over a dial-in connection is excruciating.

No flat monitors here. Still, you can order small, handy gadgets, such as universal remotes or electronic organizers, for five or six bucks.

"Hundreds of free gifts for all occasions! All you pay is shipping and handling for each gift claimed." Sounds great. But get a load of these grossly inflated "shipping and handling" charges. Yes, get a sporty Walkabout Radio, available at an off-price retail outlet for five bucks, for free! (Plus $14.99 s+h.). Get a plastic magnifying glass gratis! (Plus $4.99 s+h.). And, best of all, order your Sacagawea dollar and pay nothing for it! (Except $4.99 s+h.) That's the most expensive free money I've ever seen.

Rebate Finder Shopping Sites

This is a more legitimate site than some of the others. It is the front end for a "fulfillment company," Continental Promotion Group [] that does nothing but handle the administrative end of rebates for all kinds of companies. Ebates' customers include CompUSA, Maxell, and Microsoft. operates as a portal for online sites having sales or offering rebates. Merchants include, Office Max, and, yes,

I Regret Nothing
Well, that's not exactly true. Still, if this difficult rebate experience teaches us anything, it is this: Most of the time, if you want something, just save up your money and buy the dang thing outright at the best price you can find. You'll save on your peace of mind, if nothing else.*

These sites were all viable in April 2001.

Complain, Complain

So, let's say that you are like Gadget Girl. Because you want instant gratification, you want to believe good things about and trust the company with your money. Or maybe you did trust CyberRebate with your money and now you are having a hard time getting it back. What can you do?


First, you might want to visit this commercial complaint site. eComplaints provides a forum that allows you to submit a beef with any company. It also showcases the complaints it has received. This service acts almost as a bulletin board, a strong barometer of company consumer satisfaction. eComplaints also rates companies on their responses to complaints and offers contact information for law-enforcement agencies that oversee consumer fraud. In fact, you might want to start your rebate hunting here. Wish Gadget Girl had....

Better Business Bureau of Metropolitan New York

Here is the reliability report given by the Better Business Bureau on The Bureau has no enforcement power per se, but it does contact the company about customer complaints, publishing the results for all to see.

New York State Attorney General's Internet Complaint Form

Have a problem with an online company located in the state of New York? Fill out this Web form to file a complaint directly to the State Attorney General's office. The office has the power to file court actions against dishonest operations.

Problems with

Private citizen Phil Konstantin of San Diego, California, has had some bad experiences with This moved him to publish this site, which compiles comments sent to him about the company and offers contact information for effective complaints.

A Happy Surprise

Well, my friend may still be a sucker, but her shopping guardian angel was still watching over her. Two weeks after they were due, her first set of rebates arrived. Checks, check! She received everything she was owed.

The next day, the second batch of rebates arrived: Fourteen envelopes containing modest checks. Sensing the time-sensitive nature of her good fortune, she rushed off to the bank and quickly deposited her stack of paper.

Whew! Little too close a call for a careful shopper. We still recommend a more conservative e-commerce strategy!

Irene McDermott's e-mail address is

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