Rebate and Switch
By Myrlande Davermann

(FORTUNE Small Business) – REBATES WOULD SEEM TO BE THE PERFECT SALES TOOL. The promised savings bring in customers, many of whom never claim the rebate that drew them. University of South Carolina professor Timothy Silk estimates that rebates can boost sales at least 10%, yet only one-third of customers who intend to claim a rebate do so, thanks in part to the maze of delays and paperwork that greets them.

But customers and consumer watchdogs have caught on. In late April the Federal Trade Commission launched an investigation of XM Radio for its lackluster approach to honoring rebates; XM's stock fell 5.5% the day of the announcement. And the Council of Better Business Bureaus says that the number of rebate complaints rose from 974 in 2002 to 3,641 in 2004.

That's why any business considering offering a rebate should be aware of the latest shocking trend: honoring them. Firms including Canon, GE, and Maytag have even begun using online services such as rebateshq.com to help customers fill out forms and track their progress. The results are already clear: Last year the number of rebate complaints received by the Better Business Bureaus dropped 24%.

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.