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Consumer Rebates: Manufacturer Mandates
Latest CMTA position: OPPOSE
CMTA's Position: Oppose Signature request letter to Gov. Schwarzenegger September 10, 2004 Dear Governor Schwarzenegger: The California Manufacturers and Technology Association (CMTA) opposes SB 1154 (Figueroa) regarding regulation of consumer rebates and respectfully request that you veto this piece of legislation.. SB 1154 unreasonably limits the information a manufacturer can request in order for a consumer to establish proof of purchase. While the bill purports to provide flexible options for compliance, the options are extremely insufficient to protect against fraud. SB 1154 would have the undesirable effect of reducing the number of rebates offered by California manufacturers. For most companies which sell indirectly to consumers via retailers, rebates provide a means whereby such companies can directly provide discounts and benefits to consumers. The fraud, contractual concerns, and other issues outlined below will have a chilling effect on the marketplace, encouraging companies to cease offering rebates thus harming the marketplace and consumers. 1. SB 1154 is Unnecessary. Existing contract laws, as well as both federal and state consumer protection statues/regulations, already provide effective safeguards for consumers. The law currently requires companies to comply with reasonable terms and conditions set forth in such offers. 2. Fraud. If enacted, SB 1154 would greatly increase a company's exposure to fraud when making a rebate offer. CMTA has asked that SB 1154 be amended to offer a manufacturer the option to require a product serial number as one of the conditions to satisfy proof of purchase. This is essential to track against multiple purchasers and fraud and is simple for consumer compliance. For instance, the current requirement for a UPC code does little to protect against fraud as it is very difficult for a rebate vendor to determine if the UPC code is an original or copy. Simply requiring an original receipt, as proposed by SB 1154, would also not prevent fraud, as counterfeit receipts may be easily duplicated by modern imaging products. A unique identifier of purchase (such as a product serial number) is essential to limit rebate submissions to actual purchasers of products and thus reasonably reduce a company's fraud exposure. Under the best of scenarios, it is difficult to detect fraud, and most often fraud is not evident during the rebate validation process. The risk of fraud would be increased with the limited proof of purchase requirements and mandated check delivery requirement proposed by SB 1154. In order to comply with Section 22732 (2) all product packaging would need to be modified so that UPC codes have some notation "that is clearly and conspicuously marked as the necessary proof of purchase for the rebate offer." This would be a very confusing requirement that would have the affect of changing product packaging throughout the U.S. When a manufacturer first introduces a product, there often is no rebate initially offered. Rebates are offered later depending upon market conditions. However, with SB 1154, a manufacturer would have to reference rebates on their UPC codes and packaging all the time - just in case a rebate is later offered. That could be confusing to consumers, and thus encourage manufacturers to not offer any rebates to consumers. Many manufacturers do a great job of provide clear graphics on their rebate coupons to assist a consumer in identifying a UPC code. 3. Duplicative and Burdensome Requirements. The bill requires a company offering a consumer rebate to provide the rebate redemption form directly with the product, or at the same location and at the same time that the consumer purchases the product. This requirement is duplicative and unnecessary. For instance, some manufacturers provide rebate forms in Sunday newspapers for food items. Under requirements in SB 1154 these same rebate forms would also have to be provided at the point of purchase to accommodate someone who either did not make the effort to clip the form in the Sunday paper or for someone who lost their rebate form. Rebates are not entitlements and asking consumers to meet some reasonable conditions in order to get a discount or benefit from a manufacturer seems entirely appropriate and is the premise for manufacturers offering such rebates. 4. Restricts Contractual Rights. SB 1154 unnecessarily restricts the ability of companies to contract with consumers when making rebate offers. The proposed limitation on collection of personal information [Section 22732] would restrict companies from using rebate offers as compensation for market research. 5. Interstate Issues. Companies most often make nation-wide rebate offers and promote them on the Internet. The proposed restrictions in SB 1154 could cause conflicts for companies among the various states. The end result of the legislation could encourage companies to exclude California from rebate offers, again harming competition and consumers in California. For these reasons, CMTA respectfully requests that you veto SB 1154. Sincerely, Jack M. Stewart President CMTA staff information CMTA legislative aide: Loretta Macktal |
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