REBATES

Rebates are an extension of the coupon promotion. Also known as refunds, rebates reimburse a customer for part of the purchase price of an item after the sale. They differ from coupons in that coupons offer a discount in price at the time of sale. Rebates developed after the broad success of coupons in the latter half of the twentieth century.

The word "rebate" is derived from the Middle English word rebaten, which means "to deduct." The rebate is an attractive marketing tool to consumers because its offer of partial reimbursement for a purchase is tax-free. The Internal Revenue Service considers rebates a reduction in the price paid for a product and not as income.

How do consumers learn about rebates? Manufacturers typically offer a rebate to all purchasers of a product for a limited time offer. At the time of purchase, the consumer receives a form, which must be completed and mailed with proper proof of purchase to a specified address. This address usually belongs to a large clearinghouse that processes rebate claims, not the manufacturer. The clearinghouse processes the rebate and issues a check in the name of the manufacturer.

Who offers rebates? A wide range of businesses offer rebates to consumers who purchase their products. Rebates may be offered for household appliances, like a refrigerator, for auto parts, and for health and beauty products, among others. The amount of money offered in a rebate varies from product to product and manufacturer to manufacturer.

During the twentieth century, the enticement of the rebate has played an appealing role in wooing customers in a competitive marketplace.