CyberRebate.com has declared bankruptcy and suspended operations, leaving Yahoo, MyPoints.com, ebates.com and many other online firms as well as consumers in the lurch.
The e-tailer sold electronics, jewelry and other items and offered rebates of 50 percent to 100 percent on its products. Its largest creditors include ebates.com, which is owed $418,354; Yahoo, $300,000; EonBusiness, $200,000; Promo Depot, $134,100; Linkshare, $133,801; and Cybergold, $108,018. Some of the firms sent their customers to CyberRebate, then received a commission on sales made from referrals.
When it closed its doors May 16 and announced it had filed for Chapter 11 bankruptcy protection, CyberRebate's liabilities were listed at more than $83 million, while assets were $24.5 million. Twenty million shares of common stock in the company had been issued, according to the bankruptcy filing.
A May 16 notice on CyberRebate's site states: “Customers will be contacted regarding their rights and remedies. Questions regarding customers, vendors and others affected by today's action will be resolved as the bankruptcy process proceeds. Sadly, most employees were released this morning. A small staff will remain to take the company through bankruptcy.”
CyberRebate's business model was doomed from its start in 1998, according to Adam Sarner, an analyst at GartnerGroup, Stamford, CT.
“CyberRebate was really set up to almost trick consumers,” he said. “They would sell things for a ridiculously high price, then hope that 50 percent of the people wouldn't take advantage of rebates.” Only about 50 percent of customers take the time to mail in rebates.
“This is good news for dot-coms and good for consumers that these kinds of business models are failing, because there is really no value for the consumer,” Sarner said. “Businesses that are set up to make a quick buck, then grab it and run, are not going to last. We don't need these types of companies.”
However, the bankruptcy filing was not the first time the industry and consumers had heard about CyberRebate's problems. The Better Business Bureau of Metropolitan New York gave CyberRebate an unsatisfactory rating earlier this year because it received 73 consumer complaints about the company in a year.
At the time, CyberRebate CEO Joel Granik said that the criticism was unfair because the firm received only a small percentage of complaints compared with its large volume of orders.
The New York state attorney general's office investigated CyberRebate last year after consumers said they received rebate checks late and that the company did not respond to their inquiries about the checks.
Neither CyberRebate executives nor the company's attorney returned calls for comment.