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Dell rebates spin confusion on Web
Mix-up offers lesson on how retail errors can magnify on Net
By Bruce Mohl, Globe Staff, 3/7/2003
Dell Computer Corp. is refusing to pay two rebates worth a combined $200 to thousands of customers who bought Dell hardware late last year after being told they would receive five rebates worth a total of $710 - on computer systems that sold for as little as $800.
A Dell spokesman says the confusion was caused when links to rebates privately targeted at employees at six corporations and faculty, students, and staff at a handful of universities gained wide exposure after being posted on FatWallet.com, a bargain-hunter website.
Dell did little to rein in the resulting stampede. The rebate forms said nothing about their exclusive nature and many consumers, skeptical that $710 in rebates on such inexpensive machines were too good to be true, called Dell's customer service before making their purchase and received assurances they were eligible.
''If I can't ask one of Dell's own people for information, who can I ask?'' said Jason Lowe, a resident physician at the University of California at San Francisco, who so far has received only two of his five rebate checks.
Lowe and other consumers caught up in the rebate mix-up say Dell offered the rebates to inflate sales during its fourth quarter, which turned out to be its best ever, and is now reneging on the offer to keep its margins up. Revenue at the computer maker increased 21 percent to $9.7 billion during the quarter, while net income rose 32 percent to $603 million.
Dean Kline, a spokesman for the Round Rock, Texas, company, minimized the financial impact of the rebates. He estimated fewer than 3,000 people would be affected by the company's decision not to honor all five rebates, costing those individuals about $600,000 in lost rebates.
''Obviously, we regret the confusion that happened,'' Kline said. ''Right now we are working as closely as we can with customers to explain what happened and get them the rebates they are owed as fast as we can.''
The case illustrates how the Internet is changing the way companies and customers interact. A minor mistake in a rebate or a coupon used to involve only a handful of consumers and could be resolved quickly and quietly. Now, with the rise of Internet forums patrolled by what amounts to nearly full-time bargain hunters, a minor glitch can quickly mushroom into a huge public relations and financial problem.
Many companies view websites like FatWallet, Anandtech
.com, and Mycoupons.com as the enemy. Wal-Mart Stores Inc. sued FatWallet in December, trying to find out who posted information on a Thanksgiving Day sale prior to the holiday. The retailer later withdrew the suit. Staples Inc. has had to contend with FatWallet postings directing consumers to exploit pricing mistakes or price-match guarantees. On Feb. 23, the Framingham office supply retailer changed its price-match-guarantee policy to exclude Internet retailers, largely because company officials found themselves spending so much time trying to figure out if website prices were legitimate.
''I think every large retailer has had a run-in with FatWallet,'' said Staples spokeswoman Deborah Hohler.
Tim Storm, president and founder of FatWallet, did not return phone calls.
Dell's rebate problems may have been exacerbated by FatWallet, but they weren't caused by the website. Dell says it offered three rebates totaling $510 on the Dimension 8250 desktop computer as part of its faculty, student, and staff program. Separately, it offered a $100 rebate on the same computer to employees at six corporations and a second $100 rebate on the computer to faculty, students, and staff at a handful of undisclosed universities. Those eligible for the rebates, who Kline refused to identify, were directed to a ''private URL'' to obtain the rebate form.
Toward the end of the offer periods for the rebates, a posting appeared on FatWallet saying the five rebates could be combined. A slew of consumers pounced on the notice, contacted the company to make sure they qualified, and ordered their computers.
''When I first saw this, I thought it was too good to believe,'' said Bo Pang, a student at Boston University. ''That's why I called Dell and they told me, `Yes, no problem.'''
The five rebate forms were all available on the Dell website. Their wording was also nearly identical, with no disclaimers about the rebates being available to a select group. In fact, the two rebate forms targeted at the smaller groups say the rebates ''can be combined with any promotion at Dell Education Personal Purchase Program Website going on from Nov. 11 to Nov. 27.''
Kline, the Dell spokesman, acknowledged company sales representatives gave out misleading information about who qualified. Nevertheless, the company decided not to approve rebate applications from ''ineligible customers stemming from the unauthorized posting on FatWallet,'' according to a posting on Dell's website.
Dell's refusal to honor the rebates has spawned an avalanche of anger on FatWallet. More than 5,000 postings have been made there on the rebate issue, with many consumers trying to coordinate legal action against Dell.
''As most people see it, Dell made an offer that was subsequently accepted by those that purchased the system,'' said Michael Blitch of Tampa, who plans a filing in small claims court.
Edgar Dworsky, editor of Consumerworld.org and a former consumer official in the state attorney general's office, said many consumers had to know that the Dell deal was too good to be true. But he said the fact that Dell representatives told many consumers that they were eligible for all five rebates raises liability issues for the company.
Kip O'Connell of Newburg, Ind., whose wife took advantage of the Dell rebates to purchase a computer he admits they didn't really need, said it's not uncommon for bargain hunters to turn up deals that cost little or nothing. He said it's called F.A.R. in Internet lingo, for free after rebate.
''It happens,'' he said. ''Who are we to guess why?''
Bruce Mohl can be reached at
mohl@globe.com.
This story ran on page E1 of the Boston Globe on 3/7/2003.
© Copyright 2003 Globe Newspaper Company."