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Are Cashback Sites Legit?

Posted By : Ken Colburn of Data Doctors on August 26, 2021

Question

Are those cashback websites a scam or are they safe to use?

Answer

This question was answered on August 26, 2021.

The Internet has become such a huge way to get scammed that the adage ‘If it sounds too good to be true, it probably is’ has been ingrained into our collective psyche.

A good dose of skepticism will serve you well as it pertains to rewards-based websites but the good news is that there are many very legitimate resources that you can use when you make online purchases.

Affiliate Marketing
In most cases, you sign up for a free account that allows the site to track your purchases when you use their portal to make a purchase.

As long as you start from your portal whenever you make a purchase, the reward or cashback is tracked for you automatically.

They generally don’t sell you things directly as they have an affiliate relationship with thousands of online retailers, which is where the rewards come from.

The concept of affiliate marketing started back in the mid-’90s and has become a common way for new products and retailers to generate sales.

When an affiliate sends a customer to the retailer's website and they make a purchase, the affiliate is paid a small commission.

The reason this has become so popular is that the retailer only pays the affiliate when a purchase is made, which means that the marketing expense can be directly correlated to a sale.

Most cashback websites are simply splitting the commission they get from the retailer with the buyer.

Past and Present
One of the first big websites to use the ‘cash back’ model was Ebates.com, which launched in 1999 and became popular with avid online shoppers.

In 2014, Ebates was acquired by Rakuten (https://rakuten.com), which now claims to have over 12 million members and 2500+ retailers in their system.

Rakuten also offers cashback for in-store purchases of items available via their mobile app: https://bit.ly/3sStq6g

Another popular shopping website called RetailMeNot (https://retailmenot.com) that got started back in 2006 focused on finding coupon codes for thousands of popular items.   Coupon codes provided additional savings but oftentimes they had expired, so you had to manually check to see if they worked before checking out.

Today, just about every cashback tool provides automatic lookups for valid coupon codes as well.

Another popular tool called Honey (https://joinhoney.com) started out as a coupon code finder and evolved into a rewards system as well.  PayPal acquired it in 2020 for roughly $4 billion, which goes to show you how profitable this business model has become.

Other popular rewards websites include BeFrugal (https://befrugal.com), MrRebates (https://mrrebates.com) or if you want to save for college, there’s Upromise (https://upromise.com).

Which resources to use and learning about other helpful tools such as Slickdeals (https://slickdeals.net) that can be used in conjunction with cashback sites is the subject of many ‘how to’ user blogs online for those wanting to learn more.

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Posted by Ken Colburn of Data Doctors on August 26, 2021

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