AG REILLY STOPS PHONY MAIL-IN REBATE SCHEME
February 10, 2006
CONTACT: SARAH NATHAN
BOSTON -- A piano retailer has agreed to stop advertising and offering thousands of dollars in mail-in cash rebates that most consumers would likely never receive, Attorney General Tom Reilly announced today.
AG Reilly reached the agreement, to be filed today in Suffolk Superior Court, with East Coast Piano Sales, Inc., of New Jersey. East Coast, which periodically conducts public piano sales at hotels in Massachusetts, including one scheduled this weekend in Marlborough. In brochures mailed to promote the piano sale, East Coast advertised that consumers could reduce the cost of pianos by thousands of dollars with "mail in cash rebates." The ads, however, did not disclose that a Florida company, Cashback America, administers the rebate program and consumers would not be able to get their rebates for another three years. Even then, Cashback could refuse to give the rebates if the consumer failed to meet all of the specific requirements of the rebate program, or if Cashback did not have enough money available to pay the rebates.
"East Coast Piano used the rebate program to promise lower prices and to draw consumers to its sale," AG Reilly said. "What it didn't tell consumers was that the rebate vouchers may ultimately be worthless. Rather than wait three years to learn that the rebates are illusory, we took action now to nip this in the bud, and to prevent consumer harm."
Under Cashback's rebate program, rebate vouchers only allow consumers to be paid 35 months after they make the purchase. Consumers must comply with several stringent terms and conditions on redemption, but they do not learn about these terms until after they purchase a piano. In addition, consumers may not get the full rebate, depending on how many other consumers redeem vouchers. If roughly 15 percent of consumers redeem their vouchers, payments will be reduced below the "rebate" amount.
AG Reilly's Office is expanding its investigation into Cashback America to determine whether other Massachusetts retailers are promoting rebates that offer little or no benefit to consumers.
Last month, the Pennsylvania Attorney General's Office filed a lawsuit against Cashback alleging that the company improperly denied rebates after consumers had waited more than four years to claim their rebates.
AG Reilly's settlement with East Coast requires the company to stop using or promoting the Cashback vouchers in Massachusetts, and to notify consumers that the rebates are discontinued.
AG Reilly advises consumers to demand to see, in writing, all the terms and conditions of any rebate offer, before making any purchase that includes a rebate, and to read the terms closely. If the rebate offer is conditional, subject to a decreased dollar value, or requires strict compliance with numerous conditions, consumers should take that into account in deciding whether the rebate really affects the price they pay for goods.
Assistant Attorneys General April English and Chris Barry-Smith of AG Reilly's Consumer Protection and Antitrust Division (CPAD) handled the matter, with the assistance of Civil Investigator Jake Harney.