Hidden Downsides of Cash Back

team teri on 04/12/2019 - 11:01
Last edited 04/12/2019 - 11:08

When cash back sites like Cashrewards and Shopback first arrived I was stoked. Shop as usual and get a few percent back a few months later. What could not be liked about it?

But since the early days things have become more sinister. Not only are restrictions more common, i.e. no Cashback when using any voucher on Ebay, some sites actually give different prices and/or terms for their items depending on how you got to the site, directly going there often is more favourable than coming via some affiliate network.

The case that prompted this post: yesterday I went to make a hotel booking. I found my hotel on booking.com after navigating straight to the site. Before actually booking I had a look, both Cashrewards and Shopback were offering 6%. Nice.

But then the surprise: coming through the affiliate link, I got the same price for the room, but different conditions: instead of free cancellation up to 4 days before the stay on the direct link, I was now offered partially refundable - first night's rate is non-refundable. That happened both on Cashrewards and Shopback. Ouch!

On other travel sites I had previously noted different prices for direct linking compared to coming via a cash back site: rental-cars aggregators (Autoeurope) & flight portals (byojet). This kind of thing seems to be getting more and more common.

The questions to the audience now:

Got additional examples where cash back customers are getting a worse deal than direct customers?

Cash back sites promote their services with: "shop as normal", "there's no catch". That clearly is not correct any more. Should they be obliged to display specific warnings when clicking through to a site that gives different terms compared to direct customers? I sure think so. What's the best way to get them to do that?

p.s.: the hotel story has a happy/unhappy ending. Turns out going from the ShopBack app to the Booking.com app I got the free cancellation and 6% cash-back. Happy about that. Unhappy that I booked yesterday at 6% and today they offer 9%.

Travel Cashback

Comments

  • dcep on 04/12/2019 - 11:06

    i heard some aliexp seller auto bump up prices at checkout if going through cashback sites

    • boomramada on 04/12/2019 - 11:08
      +6

      I have a feeling, aliexp look at your face and adjust the pricing :)

    • Clear on 04/12/2019 - 13:38
      +2

      The AliExpress affiliate network will redirect you to best.aliexpress.com that generally filters out a lot of smaller/cheaper sellers. Easiest way to tell if that cookie is still active is by searching for a product and looking at the URL. If you see aliexpress.com/wholesale? then there is no affiliate cookie, if you see aliexpress.com/af/ then the cookie is active.

      That's just the tip of the iceberg too. They have a lot of other crazy things going on in their portal. E.g. can't generate individual affiliate links on alot of new release products. Nerfed the tiered affiliate rates so ALL affiliates get the same commission no matter what with no exceptions.

      • D C on 04/12/2019 - 21:00

        That's why you put things into your cart with one browser, and use another one to pay for it.

        • Clear on 04/12/2019 - 21:02
          +1

          You run the risk of having cashback not tracking with that method. I don't believe it's an issue for AliExpress, but with Amazon having items in your cart before payment will cause it not to track. A lot of other websites use session based tracking so clicking from one browser to another will cause tracking to cease.

          My method for AliExpress that has never failed me is adding products to my wish list before clicking through.

          • D C on 04/12/2019 - 21:08

            @Clear: Works fine on AliExpress & eBay. If it stops working then as you say use the wish list instead so the full transaction (activate, place in cart & pay) happens on your second browser. Edge is good for something.

  • stirlo on 04/12/2019 - 11:28
    +2

    I've also found the hotel/travel booking site cashback prices are higher. The issue is however that many websites drop an affiliate cookie on your computer and try to also refer you to these more expensive deals but they get the money not you.

    The best trick is to book using incognito/private mode on your browser and check at least a couple of sites for the dates you want. Then check cashback and if it's more expensive (after taking into account cashback) don't do it.

  • c64 on 04/12/2019 - 11:29
    +1

    the cashbacks are factored into prices you are paying

  • Hithere on 04/12/2019 - 11:30
    +7

    "No such thing as a free lunch" as they say.

  • CyberMurning on 04/12/2019 - 11:37

    Yeah same like everything else in the world. At the beginning they are all nice but when they got lots of customers they starts to become greedy and try to manipulate the system for their benefits.

  • tsunamisurfer on 04/12/2019 - 12:07
    +5

    Like the OP I compare prices pre/post cashback.

    I then alter my choices based on the results.

    As long as people know then I don't have a problem with it.

    • team teri on 04/12/2019 - 14:06
      +1

      Yes, knowing it is the problem. Cashrewards should not advertise their service with "there's no catch", I pulled that quote from their FAQ.

      I knew about prices, yesterday I was astonished it was different cancellation terms, that's a lot more subtle, harder so spot, and harder to compare.

  • JimmyF on 04/12/2019 - 13:55

    Turns out going from the ShopBack app to the Booking.com app I got the free cancellation and 6% cash-back. Happy about that. Unhappy that I booked yesterday at 6% and today they offer 9%.

    Cancel and rebook? You did get free cancellation!

    But then the surprise: coming through the affiliate link

    That 6% you're getting has to come from somewhere (its more like 7-8% by the time the cashback site takes a cut), there is no such thing as 'free' money. The hotel is paying the affiliate site for bring in business, who is then paying you.

    • team teri on 04/12/2019 - 14:08

      I've done that in the past. Mostly it works, but sometimes the hotel gets confused by the multiple messages, stuffs it up and you get there and have no room. Not ideal.

    • team teri on 04/12/2019 - 14:27

      Oh, and yes, it comes from somewhere. Hotels pay booking.com (and similar) from 17% upward in commission. They do that regardless of whether you get cashback or not, the cashback companies are paid out of booking.com's percentage.

  • BruceLee on 04/12/2019 - 14:10
    +1

    I'm pretty sure this conduct is illegal.

    It creates the misleading impression that you're making a saving when the stated saving is eroded or even negated by the higher price.

    I think the ACCC would take a very dim view of cashback sites directing you to higher prices (with fake cashback) vs going direct to the lower price.

  • poohduck on 04/12/2019 - 14:30

    re accommodation (I don't know how cashback etc works), it is definitely better to go direct. Use wotif etc to find the deal, then go outside wotif (search via google or duckduckgo) to find the same accommodation. Then make the same deal directly with them (the accommodation business). That way they make more money (percentage isn't going to wotif etc) and you get the same deal. Hotels etc have to pay a huge part of their income to these "middlemen". It's really a form of extortion because of the way google gives preference (paid for) to these "middle" businesses. The irony is that all these individual accommodation businesses have indirectly paid google to create this extortion (business pays the middlemen, middlemen pays google). Ultimately we're creating a "middle" business that isn't needed. If business doesn't play the "wotif" game, they just don't get found online, unless they are already known. But, we can use them to our advantage. They will still make millions doing very little.

    Most of those businesses aren't Australian, and they're doing the same thing world wide https://www.youtube.com/watch?v=UYspUO2dUpQ

    • team teri on 04/12/2019 - 17:31
      +1

      Well, that's actually the interesting thing about cashback. I thought along your lines for a stay in November. I booked just 1 night online and then wanted to extend another 2 nights directly with the property. Availability no problem, but pricing was. At first they wanted more than the same room listed on booking.com. When I pointed that out, they were willing to match.

      But staff on site obviously has no idea of the kind of commissions their boss pays to agents. I suggested to meet in the middle, giving them a saving, and leaving me in the same position as if I had booked with cashback. They flatly refused to go below the headline rate on booking.com. Meaning I was actually left out of pocket (to the tune of the cash back). I did it anyway because I felt embarrassed enough to not walk away and then make an online booking, but from a financial perspective I probably should have done just that.

      Also: hotels always have paid commissions. In the past it was to travel agents, now they pay online booking sites. How else would they get customers in the first place without a huge marketing expense? Whether the actual percentage is justifiable us up for discussion of course, but nothing stops you starting yet another website that offers lower commissions…

  • ihbh on 04/12/2019 - 14:38

    Generally the case with hotel bookings through third parties. The hotels have to pay them something, so won't be able to provide you with the best deal. You can't have your cake and eat it too!

    There's a website that "puts you in touch with ethical real estate agents" when you sell. Guess what, by going through that website, you could end up paying up to $5k or so more because the agent can't discount their commission because they have to pay this mob.

  • Hithere on 04/12/2019 - 17:48
    +2

    ethical real estate agents

    Good example of an oxymoron there.

Login or Join to leave a comment
Login Join