HY-VEE CEASES UPROMISE PROGRAM 2004-10-04 (2)

JON SPRINGER

DES MOINES, Iowa -- As many as 30,000 Hy-Vee shoppers who earned rebates toward college savings funds through U-Promise are no longer able to do so.

The retailer, based here, is the largest among several food retailers whose U-Promise programs have been affected by last week's expiration of an agreement between UPromise and a third-party data processor, Catalina Marketing, which provided scan data between retailers and UPromise. Hy-Vee, which is in the process of upgrading its register systems, is currently unable to deliver UPromise scan data without the help of Catalina and so had to back out of the program.

"We are in the process of converting to new register systems companywide but that won't be completed for some time," Ruth Mitchell, a Hy-Vee spokeswoman, told SN. "We are interested in getting the program back but it might not be possible."

UPromise allows consumers who buy selected products to receive manufacturer rebates of between 1% and 5% to be invested in a 529 tax advantage college savings account. Around 19,000 supermarkets and drug stores in the U.S. participate in the program, David Rochon, senior vice president for UPromise, Needham, Mass., told SN. Between 20,000 and 30,000 Hy-Vee customers who had signed up for UPromise were recently informed by UPromise via e-mail that the service was suspended indefinitely at Hy-Vee.

Retailers may participate free of charge in UPromise but must provide UPromise with purchase data in a format that makes sense for UPromise, Rochon said.

Catalina, a Fort Lauderdale, Fla.-based company that provides behavior-based loyalty marketing products for supermarkets, informed UPromise more than a year ago that it was no longer interested in providing that service, said Rachel Keener, a spokes-woman for Catalina. Keener did not say why Catalina was ending the agreement, but sources speculated Catalina felt providing the service was too costly. UPromise over the last year was able to convert most of the affected retailers to direct data delivery, either through the chain's customer loyalty card or other means, Rochon said. Hy-Vee does not have a loyalty card.

Customers can continue to earn UPromise rebates through the use of other participating UPromise services such as its credit card or America Online, or by shopping a grocery chain that offers the UPromise service, Rochon said. Customers will not lose any rebates they already have accrued in their accounts. Hy-Vee has received a number of phone calls and e-mails inquiring about the service, Mitchell said.

"We're getting a lot of feedback from customers that they'd like to see us continue because there aren't many retailers in our area who participate," she said. "We tell them that it's an information-processing problem and we're looking at alternatives, but we don't know when those alternatives might be available."

Because UPromise was operated through a third party and used encrypted information from credit cards, Hy-Vee did not know how popular the service was, Mitchell added.