Cyberrebate Was Too Good to be True

Cyberrebate.com claimed that it would obtain rebates equal to 100 percent of the purchase price of items listed on its Web site

It was one of those schemes that just sounded too good to be true. Cyberrebate.com claimed that it would obtain rebates equal to 100 percent of the purchase price of items listed on its Web site.

In fact, the Federal Trade Commission charged, the defendants sold products marked up to 10 times the retail value of the products, but still failed to pay the 100 percent rebate they promised to purchasers.

The FTC today announced a court order against the company, now in bankruptcy, charging it unfairly took in millions of dollars by promising rebates that were never paid. The company and its owners have been permanently barred from offering certain types of rebates in connection with the sale of any product, are prohibited from making misrepresentations like those alleged in the complaint, and will pay $40,000 to the United States Treasury.

The order settles the FTCs charges against the company and its owners Joel Granik and Joseph Lichter, who operated the corporation out of Valley Stream, on New York' Long Island.

Companies cant use rebates to bait consumers with the promise of cash back and then not live up to their end of the bargain, said Lydia Parnes, Acting Director of the FTCs Bureau of Consumer Protection.

Consumers who comply with the requirements of a rebate deserve prompt payment in full. By banning these two defendants from ever running a similar business, were protecting consumers and reminding companies to honor their rebate promises.

Cyberrebates Alleged Business Practices

The FTC contends that since at least 1998, and continuing until Cyberrebate filed for bankruptcy in May of 2001, the individual defendants sold consumers products on the Internet through their own Web site, cyberrebate.com. In early 2001, they changed their pricing policy from moderately marking up prices and promising rebates to pricing products at up to 10 times their retail value.

To induce customers to purchase these high-priced products, in many cases, the defendants told consumers that the products would be free after they sent in and received a rebate for the purchase price.

For example, the defendants sold a 13-inch RCA television, which retailed for several hundred dollars, for $1,099.99 and promised to provide consumers with a $1,099.99 rebate within 10 to 14 weeks after it was submitted.

The defendants allegedly continued using this tactic to induce customers to buy their products, even after it became apparent that purchasers rebate return rate was very high exceeding their ability to live up to their promises of free merchandise. They then simply failed to pay the promised rebates either within the time promised or at all according to the Commissions complaint.