FTC Fingers CompUSA in Rebate Complaints

The Federal Trade Commission has reached a settlement with CompUSA, Inc., requiring the computer superstore to pay for thousands of consumer rebates that a supplier failed to make good on. It is also required to overhaul its rebate program.

Under the settlement, which was reached Friday, CompUSA is likely to pay hundreds of thousands of dollars to customers who purchased products from computer peripherals manufacturer QPS, Inc., the FTC said. The rebates range in value from $15 to $100 each, according to the FTC.

“When it comes to rebates, retailers must deliver on their promise,” said Lydia Parnes, acting director of the FTC’s Bureau of Consumer Protection, in a statement. “The message to retailers is clear—the FTC is on the beat and will take action if you advertise manufacturers’ rebates when you know they aren’t honoring their promises.”

CompUSA executives refused to comment on the issue.

“In accordance with longstanding company policy, we do not comment on pending matters,” said Mark Walker, the company’s general counsel.

The settlement marks the first time the FTC has charged a nationwide retailer over its rebate advertising practices, including the advertising of manufacturer mail-in rebates, the FTC said.

Since 2003, the number of consumer complaints about rebates has increased. In 2003, consumers filed 1,710 complaints about rebates with the Better Business Bureau, the latest figures available, according to The Washington Post. In 2001, the bureau received 964 rebate complaints, the Post reported.

In its complaint, the FTC alleged that CompUSA engaged in deceptive and unfair practices when marketing rebates for its branded products as well as QSP products at retail. The FTC also alleged CompUSA falsely represented that QSP-funded rebate checks would be mailed to consumers within six to eight weeks, or in a reasonable time frame.

Between September and December 2001 and January and July 2002 consumers experienced delays between one to six months before receiving rebates from QSP and some never received the promised rebate at all, the FTC said.

Despite being aware of the problems, the FTC contended that CompUSA continued to advertise QSP rebates until QSP filed for bankruptcy in August 2002.

The FTC’s ruling also places further restrictions on CompUSA in advertising rebates. It is prohibited from advertising rebates unless it can prove, through a prior or existing relationship, that the manufacturer pays rebates in a timely manner. If no record exists, CompUSA must conduct a financial analysis that the manufacturer can pay the offered rebate, the FTC said.

As part of a second consent order on QSP principals, the FTC prohibited QSP principals from engaging in any future rebate-related programs.