When you purchase a qualifying AT&T Wireless phone, you'll get paperwork to apply for a rebate in the form of a Visa debit gift card. This is a pretty great deal in the cell phone world.

AT&T Wireless Visa debit gift cards that come as rebates for iPhone, Blackberry, or other mobile phone purchases are a raw deal! AT&T advertises prices for popular mobile phones that include $50 or $100 off in the form of a Visa gift card that the customer must apply for after the purchase. But…most customers will never get to use the card for the full $50 or $100.

How the Rebate Works

After purchasing a qualifying phone from AT&T Wireless, the customer receives paperwork to apply for a rebate in the form of a Visa debit gift card. As with most rebates, the customer must complete a form and mail it in along with the receipt and the applicable codes from the new phone’s packaging. Then, the customer waits. And waits.

My wife and I both purchased new phones from AT&T within the last year, and we both waited about six weeks to receive our $100 rebate gift cards. That’s not unusual for mail-in rebates, and the waiting period is fully explained in AT&T promotional materials. The problem with this rebate offer, however, isn’t the wait. It’s the form of the rebate: The Visa debit gift card.

Unlike a cash rebate (that comes as a check for the rebate amount), the AT&T rebate comes on a preloaded Visa gift card. The card can be used anywhere that accepts Visa. Almost as good as cash, right? Not quite.

My Wife’s Experience

My wife decided to use her AT&T Visa rebate card last weekend to make a couple of purchases. She actived the card and went off to the mall. She made her first purchase for $41 without trouble. The problems, however, started when she tried to use the card to make a second purchase.

Her second purchase was going to be about $100—more than the remaining value ($59) on the gift card. She carefully explained to the clerk that she’d like to charge the AT&T rebate card for exactly the remaining balance, and pay the balance on the item with another card. “No problem,” the clerk said as she ran the gift card through for the exact amount of the remaining balance.

To my wife’s surprise, the card was declined. The clerk tried again. Declined.

My wife called the number on the back of the AT&T rebate Visa card from the store. That’s when things got interesting. The woman who answered the phone told her that when she used the gift card the first time, the company put a hold on the card for the amount my wife charged plus twenty percent (to allow for a potential tip). Of course, my wife used the card in a clothing store, not a restaurant, but the card must do this for all transactions. That hold stays on the card for a few business days.

Not only did that hold prohibit my wife from using the full value of the card, but since she had attempted a purchase the caused the card to be declined, the woman told her that the card’s value would now be “frozen” for ten days! There would be no way to use the card for any reason until the freeze expires after ten days. Talking to the company and explaining the situation did nothing.

Obviously, AT&T/Visa puts these restrictions on these gift cards to prevent a cardholder from overcharging the card’s value. Because the card is not reloadable and not a credit card, Visa would have no way to recover any charges that exceed the gift card’s initial value.

Unfortunately, the restrictions also make it very difficult for the consumer to use the card for its full value. My guess? That’s what AT&T is counting on. By issuing gift cards instead of cash, they know that some people may forget about the card altogether, others won’t use it before it expires (it’s only valid for a few months), and most others will only use a fraction of the balance. Instead of paying out rebates of $100 per phone, AT&T probably pays back, on average, a much lower amount.

One final frustration: You can’t use the rebate Visa cards to pay your AT&T Wireless bill.

Buyer Beware!

So if you buy an AT&T Wireless phone and receive a Visa rebate gift card, beware! There may be no way to use the full value of the card. If somebody knows how, please share!

If you wish to voice complaints to AT&T Wireless regarding these Visa rebate cards, call one of their executive customer service numbers (attached to their corporate offices). Phone numbers courtesy of Consumerist, where you can find these number for all the big wireless carriers.

AT&T Executive Customer Service

  • Eastern States: 877-707-6220
  • Western States: 800-498-1912

Of course, you can also feel free to share your story and/or complaints about these rebate cards here in a comment.