Risks Involving Consumer Reward Programs
Consumer reward programs were introduced in the US by some retail brands as a business strategy. The strategy was adopted so that consumers remain 'loyal' to their brand and in turn increase the company profits. In other words, the consumers are helping the company churn out bigger profits by just maintaining loyalty to the brand irrespective of the quality. This may be true even if other brands have better quality products. Loyalty is here owing to the rewards.
There are credit cards that offer you rewards which is yet again another form of attracting consumers. The rewards are usually in the form of complementary gift vouchers, dinner coupons, free air mileage points, gas fuel etc. These rewards will naturally attract the consumers. You feel tempted to rake in more points by buying more and thus spending all your money just for the sake of a reward. Most of the Americans have availed at least one of the consumer reward programs in US offered by branded retailers, credit card companies and the like. However, while signing up for these reward programs not all of the consumers read carefully the rules and regulations especially the ones in fine print. The terms and conditions are often pretty confusing and people get hassled by getting the documents right for availing an offer. It is while running around, that people actually think if all the trouble is really worth it.
Consumer reward programs in US have fine print rules regarding the expiry date of the accumulated points and validity of certain offers. These rules are more often very confusing. The companies also change the rules as and when they feel like from time to time. You may or may not be informed of the change. You are most likely not informed. There are some companies that even keep encouraging you to spend the points accumulated before they expire. The end result- you spend money, burn a hole in your pocket, whereas they earn money and reap the benefits from the consumer reward programs you have enrolled for.
However, not all consumer reward programs in US have expiry dates for the points you have accumulated. In some cases, you just have to make a purchase or renew your membership before the expiry date. The points you accumulated previously will get added to the new membership automatically. Such reward programs are mutually beneficial for both parties.
In case of consumer reward programs offered by credit card companies you must be careful of the annual fees charged by the companies. Companies charge a particular amount of fee which is normally exorbitant for availing the reward programs. That is, before availing a certain reward you will have to pay a specified amount as a part of the handling charges. This makes no sense as you can purchase the product for the same price anywhere outside the company without any extra 'handling' charges.
'Forgetfulness' of the consumers is a huge bonus for the companies. Most companies forget the fact that they have signed up for consumer reward programs in US. Since the offer is for a limited period of time, it lapses before the consumers realize it. Most of them don't even realize it.