Saturday, April 20, 2013
Momma - What's a gas rebate?
Now if Smith Truck Stops offers the trucking company 2 cents off per gallon for the first million gallons and then increases that to 4 cents per gallon once they hit the million mark, the trucking company will be directing it's drivers to Smith Truck Stops. They promise this as a rebate, paid quarterly or yearly. Drivers don't get a discount when they fuel, but the company gets the payment later on. Same as a typical rebate: buy first, rebate later.
If Jones truck stops offers them 2 cents at the pump on each purchase, they are equal for the first million gallons, but since the company wants to earn the double discount, they will encourage their drivers to fuel at the Smith sites. This gets the trucking company a large check at the end of the year, and gets the Smith truck stops guaranteed customers who are spending money in their store. And let's be clear on this: margin on diesel fuel is nice, but the big money is in things like twinkies, blue jeans, crystal figurines, etc. When ANY gas station offers milk at $2.00 per gallon or gasoline at a 3 cent discount for the week, it's because they want you to come inside and buy the high-margin items. You really didn't think they were giving stuff away for free, did you?
Fuel Rebates at a national truck stop chain are designed to get more customers into the store. Just like any other business, they are incentivizing the fuel to get you inside to buy the good stuff. The problems come later during the accounting phase. With a simple rebate on tires, I mail-in the form and I get $60. With gasoline rewards points, every receipt I get tells me how much of a discount I've earned and when it expires. Unfortunately, in the truck stop business, accountants have to run reports and balance receipts and compare notes to see who is owed how much. That's where things seem to be getting complicated.
This all being said, there is a certain amount of trust involved in the process. I trust that my grocery store receipt has the correct amounts on it. Frankly, I've never held on to all of my receipts and added them up to make sure Giant Eagle isn't shorting me on my fuel perks. They could be, and I'd never know. Who would? And if it is wrong and I never noticed, is that my fault or theirs? Either way, it's small peanuts compared to other things.
Which brings me to the recent issue we are hearing about in Cleveland this past week. It involves one basic question: Did a truck stop company make accounting mistakes and short-pay customers? Or did they purposefully short-pay those customers hoping they would never "total up their receipts" and notice the mistake. That is the difference between an honest mistake and fraud. Or between civil and criminal actions. I am not nearly qualified to judge. I just wanted to explain a bit about rebates to you, so as you hear more information in the coming weeks, you have a better understanding of the "whys" and "hows" of the rebate process.
at 12:31 PM