Shuttered shopping site CyberRebate.com is telling customers this week that it will attempt to fully repay the millions of dollars it owes in outstanding product rebates.
But so far, the company isn't finding many believers.
After closing down last week in the wake of a Chapter 11 bankruptcy filing, CyberRebate issued a statement Monday night claiming that it is working out a plan to repay customers and creditors.
"It is our intention to pay back as much as we can, hopefully up to 100 percent of what we may owe," the company said, in the first new posting to appear on its website since a curt closure statement published on May 16.
The attempt at reassurance comes as CyberRebate is under fire from consumer groups and customers who once patronized the popular shopping site. A number of heavy users have credit card bills totaling tens of thousands of dollars. They had expected to cover costs with rebate checks from CyberRebates.
As the case makes its way through bankruptcy court, few former customers are confident that the rebate checks will be in the mail.
"Most people believe that they're going to get zero back," said Pamela Buttazzoni, moderator of an online support group for former CyberRebate customers. In a survey of members Tuesday, Buttazzoni didn't find a single person who was confident that the company would provide a full rebate.
Far more prevalent was a sense of cynicism.
"At this point there's a snowball's chance in hell," said Mike Opincar, who never got rebates for more than $17,000 worth of products ordered at CyberRebate. Opincar said his credit card company, Discover, agreed to cancel charges for products he didn't receive. However, he still expects to be liable for more than $11,000 worth of products he received but didn't get rebates for.
Opincar's predicament is a common one among CyberRebate users. The company, which ran one of the Web's most popular shopping sites, lured in customers by offering rebates of up to 100 percent of the purchase price of its products. To get those rebates, customers agreed to pay about 10 times the normal price of a product. (A $15 CD for example, might cost $150).
Customers were willing to pay those outrageous prices because they were told they would get rebate checks covering the entire sum within 14 weeks. Now that the checks aren't coming, they're left with gigantic bills.
Customers can't derive much comfort looking at CyberRebate's balance sheet. In its bankruptcy filing, the company said it has assets of $24.5 million and liabilities of $83.4 million. A list of its 20 largest creditors includes several customers owed upward of $79,000.
Judging by the numbers, Rick Cieri, head of the bankruptcy practice group for the law firm Jones Day, believes it's unlikely that most of CyberRebate's customers will make out well.
"In light of the amount of which the liabilities exceed the assets, I would be very skeptical about their promise to repay creditors in full," Cieri said.
At this point, customers don't have many options other than notifying credit card providers and preparing to file claims with the bankruptcy court. A few message board posters are also discussing the possibility of bringing a fraud suit against the company's founder.
In the meantime, it's unclear whether enforcement action is pending at the federal level. The Federal Trade Commission, which has received numerous complaints about CyberRebate, did not confirm or deny whether it has opened an investigation into the fallen rebate firm.
However, the agency did make clear in several e-mails to CyberRebate's customers that is has policies regarding the proper use of rebate programs.
If a company decides to offer a rebate or coupon plan, it must fully disclose the material terms and conditions of the offer and must provide the promised rebate, the FTC said.
If a company systematically fails to do this, the agency said, it may be engaging in deceptive or unfair practices and face enforcement action.
