Bankrupt Dot-Com Owes Students

CyberRebate.com, an Internet startup promising full rebates to customers for items bought through the company's website and used by many College students, filed for Chapter 11 bankruptcy Wednesday in New York.

The company offered customers a variety of electronics, home products and children's toys through its website at heavily inflated prices. After 12 to 14 weeks, CyberRebate promised to refund most or all of the purchase price.

This week's move promises to leave many College students and other customers in the lurch if the company proves unable to pay customers for items they bought--and for which they now expect payment.

Alex X. Berrio Matamoros `02, a recent customer of CyberRebate, said the company owes him about $1,700 for items he bought through the website, including a cordless phone, computer power cords and a new scooter.

"I'm supposed to be getting a check this week or next," Berrio Matamoros said.

But according to the office of New York State Attorney General Eliot Spitzer, if

Berrio Matamoros wants a check at all, not to mention the full amount he is owed, he may have to put forth significant effort.

"Bankruptcy proceedings usually take a long time and frequently creditors receive only a small part of their claim," warns the office's webpage on the CyberRebate.com case.

"I'm searching around for my credit card statements right now," Berrio Matamoros said.

CyberRebate's unique business model may cause the company's bankruptcy to hit customers especially hard. Before its collapse, the company charged customers several times the typical market price of products--always with the guarantee of a full refund in about 14 weeks.

CyberRebate customer Benjamin M. Wikler `03 said he initially had qualms about the company's tactics of overcharging and then waiting for some customers not to file their rebates.

"People don't send in their rebates, and when they do, they do it wrong," he said. "It seemed a little sketchy, but if you're a diligent consumer, you can get a good deal out of it."

Wikler for example, bought a pair of headphones last year for about $100. His rebate for that purchase came as promised.

But when he bought two new pairs of headphones recently for $200--to replace the old ones, which broke--Wikler says the company refused to reimburse him.

"I'm pissed off. I want my money back," he said.

The company's website is now inaccessible, but according to a copy of the CyberRebate.com homepage cached by Internet search engine Google.com, the company gave out more than $85 million in rebates since it was founded in 1998.

But the company may also have had a history of problems making payments.

Last August, Spitzer launched an investigation of the company when customers complained about not receiving their payments.

"Spitzer's investigation revealed widespread delays on the company's part in processing rebates and mailing checks," the website of the attorney general's office states.

"Online consumers expect and deserve the same level of service that exists with traditional stores," Spitzer said in the statement.

--Staff writer Elliott W. Balch can be reached at balch@fas.harvard.edu.