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Rarely has there been a more controversial
subject in the history of sales promotion and, more specifically,
rebating, than today's debate on slippage (un-cashed rebate checks) and
escheatment (the reversion of "unclaimed" property to the states in the
absence of legal heirs or claimants).
It seems that everyone has a different
opinion: your legal counsel, the finance department, your fulfillment
partner, your financial institution, and your accounting firm.
Why is that?
Because there is no one
universally accepted answer for so many different scenarios, and
there is a great deal of money at stake. Each situation is unique
and requires its own analysis to determine risk and liability prior to
the development of a sound strategy.
To put this in historical perspective,
one must look back a few decades when the average rebate was 50 cents. With so few dollars involved, there simply wasn't enough money to
warrant anyone's attention.
Fast forward to the late 1990s and
early 2000s when rebates in some sectors (most notably retail,
technology, and telecom) were approaching, and even exceeding, $100.00.
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With state tax revenues shrinking and
state budgets under unprecedented scrutiny, enterprising legislators in
their quest for new revenue sources suddenly determined that at least
some of those checks were not going to be cashed, and hence
should become the property of the state. Virtually ignored
for years, now when there is significant money involved, all of a
sudden everyone wants it. Will escheat laws apply to us? Whose
money is it? More importantly, what should we do about it? And, with everyone's hand "reaching for the cookie jar," to whom should
we listen?
Unfortunately, the
answers aren't quite so simple.
One thing is for certain — you are not
alone. Most organizations actively using rebates as a sales
promotion tool continue to struggle with this issue. However,
knowing what you should do depends a great deal on what you
can do.
The good news is that with the detail
that can be provided by the combination of your fulfillment partner and
your banking institution, the stakeholders involved should have access
to enough information to make an informed decision.
The correct choice for you will become
more clear with a thorough analysis of the following: how many checks
are issued, what is the average dollar amount, how many total dollars
are issued per year, who owns the account, what type of rebate vehicle
is being used, is the account used exclusively for rebate checks, is
more than one offer being drawn on the same account, what is the
expiration date on the check, etc.
The following process will help get you
started in the direction that should yield the most beneficial result:
1)answer the questions above and research all of the other relevant
facts that pertain to your particular situation; 2) document the
position of all key stakeholders and their rationale; 3) convene a
roundtable discussion, and with all relevant input and historical
perspective in hand, seek consensus among the group and deploy the
recommendations.
Hal Stinchfield, President and Founder of Promotion Management Group has
been providing rebate management, sales promotion, and fulfillment
consultation for over 25 years. He can be reached at 952.404.1915
or hal_stinchfield@att.net.
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