Internet Retailer To Modify Business Practices

As part of a continuing effort to monitor the business practices of Internet companies, Attorney General Spitzer today announced a settlement with a leading Internet retailer that had been accused of misleading advertising.

Under the agreement, will amend its advertising policy and improve customer service.

"The future of electronic commerce depends upon consumer satisfaction and confidence," Spitzer said. "This agreement helps ensure that Internet companies adhere to the highest standards in dealing with consumers."

Spitzer's office began an investigation of after receiving dozens of complaints about a key element of the online company's business model -- a rebate program that provides significant discounts on a wide range of consumer products, including electronics and computer equipment, toys, collectibles, nutritional products and household accessories. promised in advertisements that rebates, sometimes totaling hundreds of dollars, on the products would be mailed to consumers within 14 weeks of purchase. Consumers complained, however, that long past this deadline they still had not received their rebates, and that the company did not respond to inquiries about the status of the rebates.

"Online consumers expect and deserve the same level of service that exists with traditional stores," Spitzer said. "They expect Internet retailers to live up to their promises, and when problems arise, consumers want some mechanism or process in place to resolve the situation."

Spitzer's investigation revealed widespread delays on the company's part in processing rebates and mailing checks -- amounting to several months in some cases, angering consumers and potentially violating the false advertising provision of the state's general business law.

CyberRebate officials, without admitting wrongdoing, have agreed to the following:

  • The company will ensure that rebates are provided within the advertised time period and that consumers who have complained about not receiving rebates will promptly receive them;
  • The company will make available to consumers e-mail support services by which consumers can check the status of their rebate status;
  • The company will ensure that prompt telephone support will be provided to consumers with transaction problems if a telephone number is displayed on its website or in advertisements; and
  • The company will pay the state $40,000 to cover the cost of its investigation., formerly known as The Rebate Company, is based in Cederhurst on Long Island. The company was founded in 1998 and has expanded rapidly in online retailing. The company reported more than 400,000 transactions last year.

The case was handled by Assistant Attorney General Kenneth Dreifach of the Attorney General's Internet Bureau, which is under the supervision of Bureau Chief Caitlin Halligan.