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CompUSA Settles FTC Rebate Charges

March 11, 2005
The Federal Trade Commission has settled charges against nationwide computer superstore CompUSA Inc. and the officers of computer peripherals manufacturer Q.P.S. Inc., for allegedly failing to promptly pay thousands of rebates for products sold under the CompUSA and QPS brands.

Under the terms of the settlement with the superstore, CompUSA will pay consumers who purchased QPS products at CompUSA their due or past-due rebates, which ranged from $15 to $100 each.

Today’s case represents the first time the FTC has charged a nationwide retailer over its rebate advertising practices, including its advertising of manufacturer mail-in rebates.

“When it comes to rebates, retailers must deliver on their promises,” said Lydia Parnes, Acting Director of the FTC’s Bureau of Consumer Protection. “The message to retailers is clear – the FTC is on the beat and will take action if you advertise manufacturers’ rebates when you know they aren’t honoring their promises.”

In its complaint against the superstore, the FTC alleges that CompUSA engaged in deceptive and unfair practices relating to rebate offers made for both its own branded products, as well as QPS products that it marketed and sold.

Specifically, according to the FTC, CompUSA was involved with the creation of the rebate program for QPS-funded mail-in rebates for products sold at CompUSA. The complaint also alleges that in marketing QPS’s rebates, it falsely represented that QPS-funded rebate checks would be mailed to buyers of QPS products within six to eight weeks, or within a reasonable period of time.

Between September and December 2001, however, many consumers experienced delays of between one and six months before receiving their rebates, and some never received the promised rebates at all. Similarly, between January and July 2002, many consumers experienced delays and thousands never received their rebates from QPS. Despite knowing about these problems, the FTC contends, CompUSA continually advertised QPS’s rebates until shortly before the company filed for bankruptcy in August 2002.

With regard to marketing CompUSA’s own branded products, the FTC’s complaint alleges that CompUSA promised that it would deliver its rebates, ranging from $3 to $100 in value, within six to eight weeks, or within a reasonable period of time.

Between September 2001 and June 2002, however, many consumers experienced delays ranging from a week to more than three months before getting their money. Finally, the complaint against CompUSA alleges that in many cases, after receiving valid rebate requests for CompUSA-branded products, the company unfairly unilaterally extended the time period in which it would deliver the rebates, without consumers agreeing to the time extension.

The complaint against QPS principals Priti and Rajeev Sharma also challenges their rebate-related conduct as deceptive and unfair. The company is now in bankruptcy and is not currently operating.

The settlement order requires CompUSA to pay all valid QPS rebate requests that were received from consumers who bought QPS products at CompUSA, and which are due or past due. CompUSA also is required to send a rebate to any eligible consumer who contacts CompUSA or the FTC within 75 days after the order is served on the company.

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