What is Ebates? Is Ebates legit, or is Ebates a scam? Can you really earn hundreds of dollars using eBates to shop online? Ebates is now Rakuten. Rakuten bought out eBates and renamed it, just like it did with buy.com.
The Rakuten commercials promise cashback for shopping. Does this online website deliver, or is this just an Rakuten scam? I took my own look after a cousin of mine (an extreme couponer) asked if I knew anything about them. So, without further ado, here is my review of Rakuten.
Update: This review is still completely accurate, however, it turns out that Rakuten is a good deal around holiday time. The reason is that many retailers have a boosted earnings rate during sales periods like Black Friday, and Cyber Monday. For example, many retailers that usually have just a 2% or 3% cash back rate have rates as high as 11% cash back during these periods.
During this weekend following the Thanksgiving holiday, I earned 11% at Kohl’s, and 11% at Macy’s, as well as 6% on toys from Walmart. There is 15% cash back with Dell Small Business, which could add up very fast. If you bought a $1,000 computer, that’s $150 in cash back with just one purchase. With rates like these, the cash back really does add up quickly. It still won’t pay your monthly electric bill, but I racked up over $100 in cash back just by making the holiday purchases I was going to make anyway.
Rakuten pro tip: If you are going to shop with your phone, the Rakuten app makes it much easier to make sure you are using the proper Rakuten links and getting credit for your cash back.
If you sign up using this link, we both get a bonus cash payout that turns your first purchase, plus that 11% rate into a nice bonus. (Note: The next check comes out in May.)
Does Rakuten really pay cash back? The answer is yes, but it does take time and isn’t as straightforward as it may seem, and if you are thinking of hundreds of dollars in rebates, you are going to have to spend some serious money, or catch some of the higher bonus rates.
Rakuten Scam Detector
As always, our first order of business is to sniff around for a possible scam, especially when an offer sounds too good to be true. First up, we check to see if Rakuten is not free and is actually a trick to get you to sign up for something that costs money like those free credit score offers that turn into subscriptions for a monthly service with a hefty fee.
Fortunately, Rakuten gets a passing score here. In order to sign up, you only have to provide an email address. As always, I recommend using a secondary, or shopping email address. You will get “periodic shopping-related emails” from Rakuten and their partners when you sign up. That isn’t bad, but you need to know what you are doing.
During all my clicking around, I was never asked for a credit card number. This is another good sign. If they don’t have your bank information or a credit card number, then they don’t have a way to charge you money. Keep it that way. Don’t enter a credit card number while using the site. (By the way, Rakuten mails you a physical check, so they don’t need your checking account information either. If someone is asking for your checking info, then you are likely on a scam, lookalike site, or you clicked a scam link in an email. Use this link to be safe.)
So, what is Rakuten all about then?
Is Rakuten Legit? Review Time.
Unfortunately, many free things online come with terrible software or other clients that have to be installed on your computer. The Ask Toolbar is one of the worst (if you have this installed, uninstall it right away). Fortunately, Rakuten doesn’t require you to install anything. The exception to this is if you want to use the company’s mobile app, or a browser extension.
Next up when deciding if something is legitimate, is seeing if you can figure out their angle, or how does Rakuten make money? While it is true that there are hundreds of venture capital backed websites and services banging around Silicon Valley without hope of ever earning a dime, giving away money is a tricky proposition if there is no revenue. As it turns out, Rakuten has a fairly straightforward business model.
Ever look into whether Credit Karma is legit?
Whether your know it or not, many online retailers offer a referral fee or commission to websites that send business their way. The user doesn’t have to do anything. Instead the person that publishes the website includes a code in the links you click on. That code tells the retailer where you came from.
Amazon is famous for its Amazon Affiliates program which pays a percentage of purchases to website owners that send buyers to the company. Many of these retailers offer a higher payout for those who send higher volumes of customers. Rakuten uses this same model to send customers to dozens of retailers, and then offers part of that referral fee back to its users. They keep the rest of the commission and that is the profit.
There are two tricks involved here that may make it look to some like Rakuten is a scam. There really isn’t a Rakuten catch, but it can seem that way.
First, any online retailer only gives credit to one website for any sale. So, for example, if you visited my website and clicked this link to shop for finance books at Amazon, it puts a cookie on your computer marking you as “my shopper.” For the next 24 hours, if you buy anything from Amazon I get credit for that and make some money. (Not a lot. Don’t worry this doesn’t make me rich 🙂
Here’s the catch. If you go to Rakuten after you already have been marked as my referral (or someone else’s) then Rakuten would not get credit for your shopping trip, and would obviously not give you any cash back. Even worse, if you have already been to the shopping site, they may also not count you as a referral.
For example, let’s say you go to Barnes and Noble website to look up some books. Then, you remember that you have Rakuten, so you go to the Rakuten website and click the Barnes and Noble cash back link. Depending upon the agreement between the two companies, that may or may not count as a cash back sale since you were already on bn.com and not actually referred over there. You can make sure that you get full credit by emptying your shopping cart (if you are logged in), and then starting a Private Browsing or Incognito Browsing session, and then going to Rakuten first, and clicking through. (Private browsing prevents access to the cookies stored on your computer to track you.)
To avoid these problems, Rakuten has certain procedures setup with some of the retailers that avoid this issue. For example, if you manually enter a referral coupon code, then that trumps my earlier automatic cookie that was set on your computer, thus giving Rakuten the commission and you money back. However, if you did not use that coupon code, then no cash back. It’s not an Rakuten issue per se, but it isn’t as clean as you might imagine.
Check out my Acorns review.
One final detail about the fine print. Rakuten debits your account $2.00 if your account is inactive for 12 months. This helps with accounting because they don’t have to keep track of your $1.32 for years while you don’t use the service. But, it also means that dropping by every few months is necessary to keep your account balance active.
Rakuten Payout Timing
The other kind of tricky thing is that your cash back is dependent upon the retailer paying Rakuten first; it can take a very long time in some cases, but that isn’t always Rakuten’s fault.
How long does it take Rakuten to pay cash back?
It appears that Rakuten has negotiated its own agreements with many large retailers, so they probably get paid a little faster than us regular website owner types. My affiliate payments usually are added up for a whole month. Then, another month goes by before that amount is actually paid, in part so the company can adjust for any returns or fraudulent sales. If the store doesn’t pay Rakuten, Rakuten won’t pay you.
Rakuten pays out in a similar fashion. Every three months, your purchases are added up, then you get paid a month and a half later. For example, purchases from January 1st through March 31st are counted as one shopping period. Any cash back you earn during this time is then paid out on May 15th. In other words, if you buy something in January, you won’t see a penny from Rakuten for that purchase until May 15th. There is also a minimum payout amount of $5.01, so you won’t get a check for $3.27.
Is Rakuten Worth It Like Ebates Is Worth It?
Rakuten is not a scam. It’s been around for a long time and it does pay out cash back. The catch is that those Rakuten TV commercials make it seem like that Mom is collecting a sizable check on a regular basis for just routine online shopping. Remember that Rakuten only pays out four times per year, after a minimum 45 day delay. Also, it’s easy to be seduced by seemingly large percentages. When you add it up, it takes some serious online shopping to earn much money, and you have to remember to always do it through Rakuten.com
For Amazon, Rakuten shows 4 percent cash back for most items, although certain specialty categories say “up to 8 percent.” (Always beware the “up to” part of any offer.) If you bought $200 worth of Christmas presents for a freelance writer at Amazon, you would earn $8. If that’s all you end up doing, then those big fat checks from Rakuten are a myth. Even if you buy $200 per month worth of stuff, that’s still only $32 every three months. That’s not nothing, but it hardly, “helps make ends meet,” as the commercial says.
In other words, you’ll need to find either much higher paying offers (see that 12% from eBags?) or spend A LOT of money via Rakuten to ever earn hundreds of dollars. At 12% you have to spend $833.33 to get $100 from Rakuten. So, if you want to earn what those people in the commercials earn, think thousands of dollars in online shopping. At the standard 4% Rakuten rate from Amazon, you’ll have to spend $2,500 to get a $100 payout from Rakuten. “Hundreds of dollars,” would require $5,000 or $10,000 of spending.
In the end, if you buy a lot of things online, and you are consistent about shopping through Rakuten, then you can really earn some cash back and make it worth your while. Otherwise, there is certainly no harm in collecting a little bit of money a couple of times a year, just don’t let those visions of thousand dollar payouts every month cloud your judgement.
If you want to sign up with Rakuten, use this link to sign up and we’ll both get a cash bonus.