Last week, the Seattle Post-Intelligencer reported that Costco is suing the State of Washington over $3.2 million in unclaimed rebates. The lawsuit is in response to an order mandated by the state in February that Costco owed more than $3 million in unused rebates. The state says the funds belong in a state-managed program for consumers who want to claim the rebates. In Costco’s suit, however, the company alleges it should not have to turn over the requested funds as it engaged a third party rebate house to manage its rebate program. Because the company does not retain the amounts at issue, it doesn’t believe it owes the state anything.
The $3.2 million represents unclaimed Costco rebate from 2004 to 2010, plus interest.
This is hardly the first time unclaimed rebates have been the subject of litigation. In 2006, Iowa and then thirty-six other states, sued Young America Corporation, the largest rebate fulfillment company in the country, as well as, major retailers that contracted Young America’s service, seeking unclaimed rebates. The significant issue was who was responsible for remitting uncashed rebates to the states; the retailers or the rebate fulfillment house. That lawsuit resulted in numerous settlements between the states and the retailers and therefore does not provide much guidance on the issue.
It is yet to be determined what the courts will rule in Costco’s case and we will keep an eye on this developing suit to see how it plays out. Stay tuned to our blog for more details.
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