Rain Check

DEFINITION of 'Rain Check'

A rain check is a promise or commitment from a seller to a buyer that an item currently out of stock can be purchased at a later date for the current day's sale price.

The term originated in baseball in the 1800s. Spectators who attended games that were postponed or canceled because of weather could receive a check to attend a future game.

BREAKING DOWN 'Rain Check'

A rain check most commonly refers to a form of deferred compensation in grocery retail environments. When advertising a sale, a retailer is required to honor the discounted price of a product even when supplies run out. Customers can request a rain check — usually a paper voucher — if they are unable to purchase the advertised item during the sale period. The rain check ensures customers have the option to return and buy the item at the discounted price when inventory is restocked. However, retailers do not have to issue rain checks if the advertisement clearly states that supplies are limited or only available at select locations.

The Federal Trade Commission "Unavailability Rule"

After 1989, rain checks became a standard practice in grocery stores because the Federal Trade Commission (FTC) established the "unavailability rule." This federal law entitles consumers to receive rain checks, substitutes item of equal value or alternative compensation equal to the advertised items or discount.

The unavailability rule protects consumers from false or deceptive advertising by requiring grocery retailers to stock enough supplies to reasonably satisfy the anticipated demand for a sale. The FTC established this law to prevent bait-and-switch sales — the practice of advertising bargain prices to attract heavy traffic while understocking the sale items to encourage customers to buy more expensive products. Running out of inventory is not illegal, but a retailer may violate the law by repeatedly understocking sale items without informing the public that quantities are limited.

Exceptions to Rain Check Laws

Individual states have their own consumer protection acts, which may expand the liability of retailers or subject a wider range of products to rain check laws. Some states limit the amount of time consumers have to redeem the rain check once they are notified of a restocked item.

Generally, rain check laws do not apply to products that are not delivered at the time of purchase, such as appliances and furniture. Large high-ticket items are regularly stocked in small quantities and may require substantial handling costs for retailers to keep more quantities at the store. Close-outs, clearances, seasonal sales and store-wide discounts are commonly excluded, as the retailer is often selling off inventory that cannot be restocked within a reasonable time frame.

RELATED TERMS
  1. Availability Schedule

    The number of days it takes for a third-party check deposited ...
  2. Check

    A written, dated and signed instrument that contains an unconditional ...
  3. Big Ticket Item

    Big ticket items are high-value items, such as houses and cars, ...
  4. Negative Float

    The period of time between when a bank customer writes a check ...
  5. Retail Inventory Method

    An accounting procedure for estimating the value of a store's ...
  6. Rubber Check

    Another name for a "bounced check." A rubber check is a slang ...
Related Articles
  1. Personal Finance

    Top 7 Money Saving Tips For Buying Groceries

    Understand why it benefits grocery shoppers to shop intelligently with money-saving tips, such as staying away from prepared foods and looking for coupons.
  2. Personal Finance

    Top 5 Reasons Banks Won't Cash Your Check

    Learn the top reasons that a bank won't cash your check, and find out what steps you can take to prevent those scenarios from happening.
  3. Markets

    What is Supply & Demand?

    The law of supply and demand is one of the most basic principles in economics. In simplest terms, the law of supply and demand states that when an item is scarce, but many people want it, the ...
  4. Personal Finance

    Explaining Checking Accounts

    A checking account is an account at a financial institution, usually a bank, that allows for deposits and withdrawals.
  5. Markets

    Consumer Spending As A Market Indicator

    What people buy and where they shop can provide valuable information about the economy.
  6. Markets

    What is the Retail Sales Report?

    The retail sales report is a measurement of the goods that retailers sell based on a sampling of different stores.
  7. Professionals

    Bye, Mad Men: How the Net Is Changing Advertising (FB, TWTR)

    The Internet and digital media are changing the way companies advertise and market themselves. More targeted, varied and faster advertising is possible.
  8. Investing

    5 Money-Saving Shopping Tips

    Reducing the amount you spend is the easiest way to make your money grow.
  9. Personal Finance

    What is a Bounced Check?

    Bounced check is a slang term to describe a check that cannot be processed because its writer has insufficient funds.
  10. Investing

    Consumer Protection Laws You Need To Know

    Knowing these which consumer protection law can help you in particular situations can save you time, money and stress.
RELATED FAQS
  1. What is the difference between cost and price?

    Consider how cost affects a product's price. Corporate expenses and the current cost of living both impact the final sticker ... Read Answer >>
  2. What does it mean when advertisers say that "financing is available"? Should I trust ...

    When an advertisement says "financing", it means that the seller is going to give you a loan on an item that you purchase. ... Read Answer >>
  3. Why is the strategy of 'always be closing' (ABC) popular in retail sales?

    Understand how the term ''always be closing'' is related to retail sales. Learn about the benefits and drawbacks of selling ... Read Answer >>
  4. What has the retail sector evolved to its current structure?

    Find out about the retail sector, the size of United States and global retail markets and why online retailers are changing ... Read Answer >>
  5. What's the difference between the substitution effect and the income effect?

    Learn the difference between the income effect and the substitution effect in terms of spending money. Predict which direction ... Read Answer >>
  6. What components are factored in determining net sales?

    Understand the key components that factor into determining a company's net sales. Learn about the underlying drivers of those ... Read Answer >>
Hot Definitions
  1. Put Option

    An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security ...
  2. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  3. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  4. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  5. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  6. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
Trading Center