Rebate processor settles with Pa.; consumers may benefit

If you applied for a product rebate but never received your money, you might get a second chance, thanks to a settlement with Parago, a Texas rebate processor, announced Tuesday by Pennsylvania Treasurer Rob McCord.

McCord said Parago - whose clients include Staples, Home Depot, Verizon, and General Electric - has agreed to send nearly $2 million in unpaid rebates to Pennsylvania's Treasury Department, which manages unclaimed property that legally belongs to state residents.

The settlement says the money "represents a good-faith estimate" of the amount Parago never successfully paid to Pennsylvania consumers who claimed rebates but never returned to the retailers or manufacturers whose rebate programs it managed.

Parago did not respond to a request for comment.

Such funds - "retained slippage" in industry jargon - were at the heart of a 2008 challenge by 37 states to Parago's practices, said Michael Smith, McCord's deputy of chief of staff. The states contended such funds should have been turned over to them, even if contracts between Parago and its clients left it unclear who was responsible for doing so.

Pennsylvania officials said the other states settled earlier for about 51 cents per dollar.

"We held out because I believe our consumers are due 100 percent of what they are owed," McCord said in a news release announcing the deal. Parago also agreed to provide data to help identify the rightful recipients of the funds, to be paid to the state over the next three years.

The announcement said Parago routinely withheld funds from rebates that were sought - typically by filling out a form after a purchase - but never successfully paid, perhaps because a check was returned. In exchange for the right to retain those funds, state officials said, Parago offered client companies a discount on processing fees.

McCord said the state also intended to seek unclaimed rebate funds from manufacturers and retailers that have not forwarded the money to the Treasury Department.

"If consumers are promised a rebate, they should receive that rebate. It shouldn't go to pad the bottom line of a company that promised it as a sales incentive in the first place," McCord said.

Smith said the settlement covers uncollected rebates dating back as much as decade. People who believe they are owed such a rebate may call 1-800-222-2046 weekdays from 7:30 a.m. to 4:30 p.m. They can also search for unclaimed property online at www.patreasury.gov.