Microsoft’s Cashback program is an attempt to take a bite out of the lucrative search marketing market. It’s a big market, and it’s supposed to be a big play: it’s what Microsoft announced to much fanfare after the Yahoo! take-over fell through.

The idea is to offer cash to customers in order to incent them to make use of MS Live Search, and therefore attract more advertisers to advertise on Live. 

According to this Fatwallet thread and several others there have been significant problems with the cashback program. The users make purchases, receive Microsoft’s cashback email confirming the cash back, and sometime toward the end of the 60 day cycle receive another email telling them their cashback is denied. Apparently there is no good way to contact MS and correct the issue.

If true, this is a very significant problem. Even if not true, the current state of complaints is a very significant problem.

The whole point of this program to create a positive image in the users’ minds and habituate them to using Live. If instead the cashback program creates an image of difficulty, dishonesty, and headaches, it will backfire and drive users to other search engines.

My guess is Microsoft is outsourcing the cashback operations to one of the rebate handling firms, who in turn are employing their regular tactics of rebate denial in order to save money. 

The problem is the millions of dollars saved here are squandering away the billions this program is supposed to enable.

It’s fairly surprising that Microsoft would let this happen; someone high up needs to wake up and fix it quickly.