How scammy are cashback sites?

Question

These days cashback sites (e.g. iGraal) are getting promoted pretty heavily, at least in France (many advertisements, YouTube sponsoring, etc...). The concept is that you buy stuff online and they give you money back on that purchase, which you can subsequently wire to your bank account.

A friend of mine is pretty strapped for cash and told me about those sites, which got the words "Too good to be true", "No free lunch" and "You're the product" popping up in my head. According to my reading of the iGraal terms of service, it seems to me like they can make pretty scummy use of your personal data, so I dissuaded them from registering.

Is this practice really too good to be true? Are people getting screwed by these sites?

Answer 1

I use cashback sites (in this case topcashback.co.uk) and have received hundred of pounds of cashback. I get a small percentage back for spending large amounts of money on websites that I was thinking of using anyway.

Some points to note. "A friend strapped for cash" - you only get cashback by spending much more money, so its not much help if you are strapped for cash, and is only really useful if you were planning on spending that money.

Cashback is not guaranteed either - so making a purchase based on getting cashback is a bad proposition - the connected company might not pay out.

Cashback is not always the best - generally sites might offer a percentage of cashback - often it is not paid if you use other vouchers for their sites, and these vouchers/codes can be better. For example I was offered say 3% cashback on a link to a site - but on that site I could use a 30% off voucher instead - a much better deal.

Sometimes cashback makes things worse - for some sites (generally I've found some holiday/travel/hotel comparison sites the worst) the prices increase when using cashback links! So you need to check for that. It's been cheaper for me to book a holiday not using cashback as the price increase was more than the cashback (probably as it was taking into account kickbacks to the cashback site). This is not always true, generally it makes no difference on conventional retail but for insurance/holidays you need to be mindful and check directly.

With regards to personal data, I'm not too bothered about them finding out I buy things, I guess it depends on your attitude to data in general and whether you use loyalty cards etc. Personally I do, I can also understand why people choose not to. I presume the cashback sites get some of the kickback from retailers who benefit from free advertising. They also tend to take a small amount of cashback as admin fee once a year (in the site i use case about £5)

The closest I've gotten to a free lunch is depositing £20 on a gambling site, getting £20 cashback for doing this. However (A) it takes over 6 months to get this £20 back through cashback, (B) there is a risk that cashback is not paid and I lose £20 and (C) the gambling site is hoping I deposit more and get addicted to gambling - so I would view it as a business transaction as opposed to a "Free lunch".

So:

Is it too good to be true? - Not really, it's not that good. It can be useful if you were planning on using the site anyway to buy things, you can get cashback as long as it's not more expensive using cashback sites or there weren't better vouchers out there.

Are people getting screwed? - Sometimes prices are worse, sometimes other offers are better, but sometimes I've been paid cashback on things that I was going to buy anyway, it didn't cost me any more and months later I have had cashback paid to me. So as long as I'm wary, no I'm not getting screwed.

Answer 2

The short, TL;DR version: They're going to sell your personal data and spam the heck out of you and try to convince you to buy a lot of products that you don't need, but they're not going to be able to steal your money. They're also not going to give you back a ton of "free" money. There are steps that you can take to get the money back and give them more limited personal information.

The long-winded version:

As @Tim said, they're generally not horrifying, but you're also correct-- you are the product. The goal of these cashback sites is to stop you from thinking through rationally. If you don't need a thing and you buy it for 99% off, you've still spent money that you weren't intending to spend. That isn't saving money-- that's spending it. If your friend is smart about this, they will only use cashback sites for things that they already needed and planned to purchase (most likely groceries and toiletries). If your friend is not wise about this, they will see something like "50% cashback when you buy this video game," get excited by the huge savings, and spend money that they don't have on a product that they don't need.

Most likely, the cashback site will sell any personal data that they collect to a big data aggregate. Most likely, signing up for these services will lead to increased spam email. The easiest way to avoid that is to just set up a dummy email address for the accounts. I maintain a gmail account that's a semi-obscure Star Wars character I enjoyed when I was 15. It's for any sort of promos that I don't care about, and it's clogged to the brim with spam. I like to give fake information as much as possible, but unfortunately, sometimes you have to give real info (like your real name, possibly your real address). I generally skip out on telephone numbers, and give them a fake number of some sorts; they don't need my real phone number to send me a check physically or electronically, even if they're demanding it. When you're signing up, there will probably be a lot of pre-checked boxes that read something like "subscribe to our texting/mailing list and receive exclusive offers!" that you'll need to manually uncheck to reduce your spam.

These sites will most likely want to use some sort of cookies for tracking, or to read universal cookies from other websites to try to determine as much as they can about who you are and what they can sell you in the future. You can circumvent this by using a private/incognito session to do so. Alternatively, you can also just use a separate browser for all of this. I use Firefox with strict security settings like "never share my cookies with any third party sites" for anything spammy looking, and I use another browser for my day-to-day web browsing. You can configure pretty much any web browser to deny cookie sharing and storing if you want to, it will simply mean you have to log in to any sites you visit with that browser, as it will not have the means to auto-log you in.

In summary: There are steps that you can take to share less of your personal data with these individuals. It's ultimately a choice, but the most nefarious thing that they can really do is try to hit you with targeted ads or send you junk mail. If you disable cookies when regular browsing, then they can't even hit you with targeted ads.

Answer 3

Welcome to the Information Age where your information is a commodity!

Most of these sites are legit, but don't expect grand paydays either. My wife uses one with her shopping and I've noticed that there's two major hooks for them to make money

Submit your full receipt

With image processing being really good these days, you're almost always telling them you bought Deal X... along with your entire grocery list. Since they know a lot about you already, you are now categorized into a demographic and statistic

Women aged 30 to 50 bought our brand with Brand Z. They were also 5x more likely to buy a candy bar vs not buying our brand.

Stores used to do this back in the heyday of coupons and...

Rebates

Coupons have always been a racket, but they worked the same way. Ever wonder why so many brands give out coupons? Not only do they get a glimpse into what their demographic buys, they also entice you to buy their product.

Special! Buy two Brand X pizzas and get $2.00 in your account!

Who cares that Brand X pizzas cost $4.00 more than the generic supermarket brand? I got money for doing it! You got money for shopping and they got another sale. In years past, this was a manual process. Buy a lot of something, mail the documentation in, and a check would arrive in the mail 6-8 weeks later. Nowadays, these services bypass that by simply having you do all the work of data entry.

Answer 4

Retailers often pay for customer referrals; if Random Co can persuade you to buy something from Luxury Brand Co then Luxury Brand Co will pay Random Co a percentage. These cashback sites simply pass some of that money back to you.

My personal experience of these sites is:

1. The big discounts are on luxury items rather than regular purchases. If you want jewellery, designer shoes or tropical holidays then you might get 30% off. For a new 40 inch TV its going to be nearer 10%.

2. Going with the cashback site limits your options to the companies they have made deals with. There is not much point in saving 10% on a TV if a competing model does the same thing 10% cheaper anyway.

3. You can often get the same saving just by shopping around on-line.

Overall I concluded that it wasn't worth the extra time and hassle. But to answer your question, they are not generally scams (although the potential for any given company to be a scam is always there).

Answer 5

The answer from T Wildash captures the key points and I've had similar experience, I've received a decent amount of money with no notable increase in spam and no aggressive selling.

I'm answering just to address a technical point around whether the offers are 'too good to be true'. Cashback sites use what are known as affiliate links, these are exactly the same type of link which is used to capture and monetize advertising. When you click through an advert and buy something in the advertiser the site which hosted the advert received some royalties. Cashback sites are just like an entire site dedicated to adverts and to give you some incentive to visit this contentless site they share the royalties with you. So everything is quite legitimate and no more scammy than advertising and capitalism in general.

Answer 6

Ebates and honey in the US have both proven to be pretty helpful for me.

Honey finds you the best deal across the internet, and ebates (now Rakuten I think) gives you a % of cash back, paid quarterly via check in my mailbox.

I have gotten lots of checks back from rakuten. Real smoothe. It essentially amounts to free money IMO. I usually don’t change my normal shopping habits unless I am making a very large purchase and then I will try to maximize the % of cash back.

So if you get 2% from rakuten, and another 1-2% from a credit card, it’s not life changing, but it adds up.

Answer 7

I used one of these (Rakuten, to be specific) for some of my Christmas shopping this year. So far, it seems okay. I don't think I actually received 100% of the money back I should have (you can track it on the site/app), but the ones I missed would have earned me small change (as in, less than a quarter). With their $10 "signing bonus" I've earned $20 on a few hundred spent. Because the incentives are pretty small, I'll probably only use it on large purchases and during the holidays, but it's a nice little bonus when you shop wisely.

My unofficial rules of use are 1. shop around outside of the app, only go to Rakuten when ready to make a purchase. 2. Subsequently, don't factor the rebate into the price. I see it as a random cash bonus. 3. Don't, in order to earn the rebate, buy anything you otherwise wouldn't.

I'm not fond of the prospect of an increase of emails, but the only time it really actively bothers me is when I go into my "promotions" tab to clear it all out and unsubscribe, so I don't know how much of my junk mail I'll have to thank Rakuten for.