Commissions, Kickbacks and Referral Fees
We had an interesting discussion at The Wedding Party office today.
A planning company called one of our vendors and actually asked her to raise her prices by 20% so that she can get that amount as a commission! Several of our wedding pros have been approached by this company and asked to pay a commission in exchange for a referral, although not always quite so blatantly.
There can be a blurry line between commissions, kick backs and referrals. Our company policy strictly prohibits the acceptance of kick backs or referral fees – we ask that our vendors pass that dollar amount along to our clients as a discount. But what about a little gift thanking someone for a referral? Is there a dollar amount that is too extravagant and the gift should be sent back? It’s not always black and white.
The Association of Bridal Consultants (of which we are members, and the above-mentioned company is not) has a Code of Ethics:
Members will…
- Represent each client fairly and honestly, providing all agreed-to services in a timely and cost-efficient manner.
- Establish reasonable, proper fees for services and provide written estimates to each client.
- Use honest factual advertising.
- Deal with employees fairly, in an unbiased manner.
- Operate an establishment that is a credit to the Association and the community.
- Disclose to clients any payment received from suppliers.
My question is whether or not the brides that hire this company know that not only are they paying them, but the vendors are also paying them. And moreover, is the bride getting the best vendors for her wedding, or anyone that will pay a commission?
Many of the most well-respected professionals in North Florida will refuse to pay these commissions and therefore will not get referred by this other company. Would you want to lose out on the best photographer or band in town simply because they will not pay your planner a commission?
I’d really love some feedback below, both from wedding pros and brides-to-be…What are your thoughts?
Posted in Helpful Tips on October 13th, 2009 by Heather.
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October 13th, 2009 at 7:25 pm
For our business, it comes down to integrity. We want to be known and chosen for our quality, professionalism, and personality. We don’t mind showing appreciation to our fellow wedding vendors (props on our blog, thank you card, Starbucks, cupcakes, etc.) but not payments. We feel that brides trust consultants/planners to guide them to the best vendor for them and look out for their best interests on their wedding day.. not the consultant/planner’s pockets.
October 13th, 2009 at 8:54 pm
As a bride, consumer and a Jacksonville Sheriff’s Detective who investigates ‘schemes to defraud’ everyday, I find the line is more black and white (less grey) than we realize. I have investigated multiple instances where contracts are accepted not becasue they are the “best” bid, but because the vendor agreed to up charge the bid (giving the difference to the corrupt company). Misrepresentation in the wording of a contract is itself fraudlent. This is a crime in my business and I would say it is, at a minumum, unethical in the wedding planning business.
October 13th, 2009 at 9:43 pm
Brides of Jacksonville need to be vigilant about who they open their wallets to. I would certainly NEVER do business with a wedding planner who did not disclose payments made to them by vendors or suppliers. Your reputation as a company, a professional, an artist etc is on the line in an industry such as this. I would submit to you that in the end the extra money made using this unprofessional and unethical kick-back technique will pale to the money lost when word gets out and your reputation in the wedding industry tanks. Blogs, email, Twitter, Facebook, MySpace will circulate your reputation so fast your head will spin. I’m happy to hear small exchanges of kindness and appreciation (Starbucks, cupcakes, blog props etc…) are the norm and not the exception with the vendors that work with MY planners (yeah, FCW&E)!!
October 14th, 2009 at 6:58 am
I think that raising your prices to give the wedding planner/vendor is so unethical. Reputation is this industry is everything. If there are any savings they should be passed onto the bride..Wrong is Wrong and Right is Right..On the other hand there is nothing wrong with showing your appreciation for a job well done to vendors in a small way, as long as it is not a large value amount. Maybe there needs to be a cap set on how much an gift/gift card can cost.
October 14th, 2009 at 11:16 am
Kickbacks are kickbacks whether its a gift card or cash or a commission. If you are professionally representing yourself and offering a recommendation it should be based on skill set, professioanlism and work-ethic of parties inloved. What if the world offered kickbacks and commissions to the folks who give references on resumes…the HR staff’s ability to get true and correct info about an applicant or candidate would be tainted and swayed. Its the same thing here. Work with professionals and recommend them because its a pleasure to do biz with like-minded passionate hospitality professionals
October 14th, 2009 at 1:39 pm
I am adding to my post..I was not clear..Giving someone a cookie, cupcake or buying them coffee should not be considered a kickback if you are meeting them to discuss a clinet…If you entice the vendor by promising them something in return that hold $$$$$ value then that is wrong. I refer vendors to my customers all the time but never do I or should anyone expect anything in return..The recommendation is the best thing you can give a vendor not gifts or anything else.
October 20th, 2009 at 9:53 pm
I’m happy to see this blog post as I have recently had experiences with a planner who has demonstrated less than ethical behavior, including a kickback, but also bashing wedding vendors TO other vendors. Luckily, in talking with another wedding vendor with whom I’ve worked with previously, I found that I was not the only one having this experience. Not only is it unethical and unprofessional behavior, which I cannot engage in, but I also do not want my business associated with a business that is quickly gaining a negative reputation. Now, my next step is to quickly disconnect myself from this company.
October 21st, 2009 at 7:24 am
I was so glad to see your blog and have reinforcement that this was not limited to our business and a couple of select others. Our business was approached regarding a kickback from a wedding planner, most likely the same one in question in your blog. We were initially approached with the request to provide discounts to their brides in exchange for “exclusive” business. It quickly escalated to a blatant request that we increase our prices to the brides and the difference be paid to the wedding planner. Of course our response was less than favorable. Our business does not believe in this type of fraud and integrity is everything. We have distanced our business from this company not only due to the kickbacks, but due to the fact they use badmouthing vendors to vendors as a marketing strategy to gain their business. During these diffifult economic times, it is important to maintain professionalism, ethics, integrity, and mutual respect. Giving kickbacks or supporting a vendor that disgraces other vendors is not worth compromising your business just to make a little extra money. Legitimate business practices are what will get you ahead. This has definitely been a learning experience.