Pennsylvania Attorney General Corbett Sues Florida-Based Companies Accused of Deceptively Marketing 'Rebate' Program to Hundreds of Pennsylvania Consu

15 January 2006

HARRISBURG, Pa., Jan. 13 -- Attorney General Tom Corbett today filed a lawsuit against two Florida-based companies accused of deceptively promoting cash rebates to potential buyers of big ticket items, without disclosing prior to the sale, that the rebates are actually vouchers that cannot be redeemed for 54 months. Approximately 265 Pennsylvania consumers across the state were promised rebates valued at nearly $855,000.

The lawsuit accuses defendants Cashback America Inc. and United States Administrative Services Inc., also known as U.S. Administrative Services Company, of violating Pennsylvania's Unfair Trade Practices and Consumer Protection Law. Both businesses are headquartered in Orlando, Florida.

Attorney General Bureau of Consumer Protection (BCP) agents said that the defendants beginning in 2001 promoted the voucher program to various merchants as a method to boost sales and profits. In Pennsylvania, the participating merchants sold pools, spas, water treatment systems, motor vehicles, flooring, pianos, pool tables and mattresses to approximately 265 consumers across 31 different counties.

The advertised rebates ranged from $100 to $10,000. The more expensive the item, the bigger the rebate offered. In some instances the rebates were equal to the purchase price of the merchandise, providing buyers with 100 percent of their money back.

According to many consumers, rebate information was not given to them at the time of sale but they were instead instructed to look for the forms in the mail within a few weeks. The buyers said when the forms arrived it was the first time that they were made aware that the rebates would not be redeemed for months, even years.

According to the complaint, 250 Pennsylvania consumers who purchased items between 2001 and 2004 were told that they were ineligible to receive their rebates for 54 months. Another 15 Pennsylvania consumers who made purchases under the voucher program in 2005 were informed that they could redeem their vouchers within 11 months. Each consumer admitted that they only bought the items because of the rebate offer.

"There is no doubt that the rebates were the major factor in consumers committing to these significant purchases," Corbett said. "With that in mind, imagine how shocked and angry buyers were to find out after the sale, that the rebates would not be available for as long as 54 months. And even then, getting your money back was subject to one shot at properly filling out and submitting a host of very specific documents, on a specific date that all but guaranteed no payout."

Corbett said an Allegheny County consumer last May purchased a pool pump for $256 and was told by the seller that he would receive the $100 rebate forms in the mail within two weeks. When the forms arrived, he said that's when he first learned about the terms of the voucher program and demanded a refund. The consumer was told it was too late to issue a refund because the pump was installed and used.

The lawsuit accuses the defendants of failing to disclose up front to consumers that the rebates are a voucher program promoted as the "CASHBACK CHALLENGE." The CASHBACK brochure said, "We believe you won't remember the date you made this purchase ... . PROVE THEM WRONG!"

Other statements indicated, "The only people to benefit are those who remember to redeem their promotional voucher at the appropriate time and according to the terms and conditions of the promotion."

In much smaller print, the conditions included claims that the full amount of the voucher may not be paid if there is not enough money in the interest bearing financial instruments designated for paying future valid claims.

According to the lawsuit, other conditions to redeem the vouchers that were not disclosed up front to consumers include:

* Purchasers must "return the check stub section of the Cashback Check by

registered or certified mail or by courier service to the USAS

administration address at any time on or before the 14th day after the

issue date shown above."

* Purchasers must "return the original Cashback Check by registered or

certified mail or courier service no earlier than the end of the fifty-

fourth month after the issue date and no later than the 30th day after

the end of the fifty-fourth month after the issue date together with:

The original bill of sale and lease or credit agreement obtained from

the merchant or dealer for the item; third party proof that you have

paid for the goods; a photocopy of your valid passport, or driver's

license and proof of your identity -- you must sign the photocopy to

confirm it is a true copy of the original document; a copy of a recent

utility bill as proof of current address and proof that the check stub

has been sent to and received by USAS within the time limit specified by

registered mail.

Consumers were informed that if they complied with the conditions, "We will within six weeks of your claim pay you up to 100% of the amount shown on this Cashback Check." Additionally, the conditions stated that, "We shall not be obliged to make any payment to you if we have reasonable grounds to believe that you have been reminded or encouraged by the media or any reminder service or venture to make a claim under this Cashback Check."

Corbett said, "Even more unreasonable is the disclaimer that any error on the consumer's part in submitting a claim on his or her first attempt is grounds for non-payment of the claim."

The lawsuit also accuses the defendants of falsely stating that the merchant agreements, requiring the sellers to place a certain percentage of funds into an escrow account, will be sufficient to pay the consumer claims. In reality, the lawsuit alleges that the merchants are unaware that the defendants divert funds from those accounts making it less likely that they will be available to pay out consumer claims.

The complaint asks the court to require the defendants to:

* Cease conducting business in violation of Pennsylvania's Consumer

Protection Law.

* Issue promised rebates to all eligible Pennsylvania consumers who can

prove that they purchased products under the Cashback Promotion.

* Pay civil penalties of $1,000 per violation and $3,000 for each

violation involving a consumer age 60 or older.

* Pay the Commonwealth's investigation costs.

Consumers who suspect that they are entitled to a refund in this case are urged to file complaints with the Attorney General's Office by visiting http://www.attorneygeneral.gov or by calling the Bureau of Consumer Protection at 1-800-441-2555.

The lawsuit was filed in Commonwealth Court. The case is being litigated by Senior Deputy Attorney General Marcia L. Telek DePaula of the Attorney General's Bureau of Consumer Protection in Pittsburgh.

CONTACT: Barbara Petito, Deputy Press Secretary, Pennsylvania Office of Attorney General, +1-717-787-5211, petito@attorneygeneral.gov

Source: prnewswire

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