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By Consumers Union on Friday, September 3rd, 2004

September 3, 2004

Governor Arnold Schwarzenegger
State Capitol
Sacramento, CA 95814

RE: SB 1154 (Figueroa), Request for Signature

Dear Governor Schwarzenegger,

Consumers Union writes in support of SB 1154 (Figueroa). This bill provides additional protections for consumers when they purchase products that offer rebates. The bill was amended several times after it was introduced in order to answer many of the legitimate concerns voiced by the business community. Most opponents, including California Retailers Association, Grocery Manufacturers of America, Bayer HealthCare LLC, Dell, Nextel, Apple, Sprint, Cellular Telecommunications and Internet Association, SBC, RiteAid, AT&T Wireless, and T-Mobile, removed their opposition. Consumers Union is the sponsor of this legislation.

The number of rebate offers is growing rapidly with offers amounting to $10 billion in 2002. According to Benyen Corporation, a market research firm in Niagara Falls, NY, more than two thirds of all personal computer offers at retail included a rebate in 2002. This is up from 53.5% in 2001. Such growth in the offerings demonstrates that retailers are profiting from them, and consumers are responding to the offers.

Yet, widely quoted estimates show that 60% of rebates go unfulfilled; forty percent are never claimed and the other twenty percent are denied (situations when consumers fill out the applications but are later denied). (1) There are various reasons for denial including consumers not following the directions exactly or not providing all of the specified information. It is unfortunate that while promising good value, rebates often result in significant consumer frustration. This growing frustration is reflected in the statistics: the Federal Trade Commission expected to receive 1,700 complaints last year on rebates. This is up seventy percent from the three previous years.

The requirements to receive rebates are often unnecessary hoops through which consumers must jump. Consumer Union collects some unsolicited consumer complaints regarding rebates. One consumer who did not receive his rebate was told that it was because he provided the wrong label from his box. Another was told that he did not receive his rebate because he did not include an inside flap from the box. A third has been waiting over a year for a fifty dollar rebate, though he has been told repeatedly that it would arrive within two weeks. Other consumers stated that they had never received the rebate at all.

The consumer protections in SB 1154 are simple and respond to the various problems that many consumers experience when attempting to obtain their rebates. Some of these protections include:

• Companies cannot require original receipts from consumers unless they provide duplicate originals;
• Companies must provide consumers at least 30 days to redeem their rebates and must fulfill the terms of the rebate within the same amount of time required of consumers. But, it cannot be longer than 60 days;
• Companies cannot require consumers to write identifying information on the rebate form unless the receipt does not identify the purchased product;
• Companies offering rebates may not require information that is not necessary to process the rebate, including information beyond a name, address and phone number; and,
• Telephone numbers for rebate inquiries must be provided to consumers to check on the status of their rebates. For purchases that take place over the internet, companies may provide an internet site.

SB 1154 has been significantly amended at the request of many businesses. These amendments address the legitimate workability concerns voiced by businesses without compromising the integrity of the legislation.

When a consumer purchases a product that includes a rebate offer, the consumer expects to receive the rebate in a timely manner without an unreasonable amount of hassle. SB 1154 attempts to ensure that these consumer expectations are met.

For the above reasons we strongly support SB 1154 and urge you to sign it.

Sincerely,

Shelley Curran
Consumers Union

cc: Senator Liz Figueroa
Mr. Richard Costigan, Legislative Secretary

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(1) Peter Kastner of Aberdeen Group in Boston, as quoted in the NY Times, April 17, 2003.

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