Issue Date:  -  Wednesday, 22 January 2003

Cash Back Offers No Great Deal

Authorities are concerned that a company based in NSW is operating in Perth recruiting traders into a Cash Back scheme that offers consumers who deal with participating traders large amounts of money back after almost five years.

Cashback Australia promotes its services as a sales closing tool for traders who wish to get the edge on their competitors by offering their customers the opportunity to receive what is known as a Cashback "cheque" for up to 100% of the face value of the "cheque". The "cheque" is just a redeemable voucher.

Consumer protection agencies in Queensland and the scheme's home state NSW have both issued warnings to traders and consumers about the concept and strongly advise against participation.

The WA Consumer Protection Commissioner Patrick Walker holds great concerns about consumers not being able to obtain their promised benefits as well as traders possibly putting their reputations at risk.

"This scheme operates by placing onerous terms and conditions on the consumer as well as the use of long time frames and complex requirements before a consumer can claim their rebate.

"Consumers have to jump through a number of hoops and agree to provide numerous documents, some of them originals, within certain timeframes or they become ineligible for their Cashback payment.

"A clause within the Cashback contract also allows the scheme not to honour a consumer's claim if the consumer has been reminded by the media (or others) about their right to claim.

"Considering that some rebates become due after fifty four months it would be unusual for most people not to need some form of reminder", he said.

Investigations have shown that only about 10% of consumers actually make a correct claim for payment. It is this `slippage' that the scheme depends on to make their money.

"We are most concerned that the funds destined for Cashback "cheques" to consumers are held in an overseas bank account believed to be in the USA and outside of the jurisdiction of Australian consumer protection agencies.

"Traders need to ask themselves if they are prepared to accept any consumer backlash should the scheme fail or consumers believe they have been duped if they are not able to claim for any reason", Mr. Walker said.

The scheme also has Consumer Protection worried that the large refunds promised could motivate some consumers into spending big believing that it was easy to get the money back within three to five years.

Theoretically the scheme is free to consumers but concerns are held that merchants may increase their prices to cover the fee charged to the trader by Cashback.

Documents refer to funds being held on trust in offshore accounts with weekly limits that could restrict the amount of money available at specific times to cover claims.

A company by the same name (Cashback Australia) but with different directors collapsed some years ago leaving participants high and dry. Some consumers subsequently took legal recovery action against the traders.

"Do not be seduced by fantastic sounding offers. Shop around and take the many factors into consideration when making substantial purchases, not just price.

"Never be rushed or talked into buying anything with Cashback offers unless you can easily afford the purchase price, as chances for future refunds are uncertain", Commissioner Walker said.

Consumer Protection investigators can be contacted by telephoning 1300 30 40 54 for the cost of a local call.