By: Danielle Andrews Sunkel & Tracey Manailescu
Let us first preface this article by stating that we are not lawyers, if any legal advice is needed, please contact a lawyer.
*This article was originally published in 2010 and has been updated and added to.
Definition of Kickback: An illegal, secret payment made in return for a referral which resulted in a transaction or contract. (source: www.investorwords.com)
There is much confusion as to why Wedding Coordinators taking Kickbacks, Finder’s or Referral Fees from vendors is illegal, while Event Planners can legally take kickbacks.
The practise of taking Finder’s Fees or Kickbacks is very prevalent in the Events Industry and is basically “Standard Operating Procedure”. If you are operating an Events Firm, hiring and signing all contracts with vendors and paying them on behalf of your client, in effect creating a package for your corporate client, then you are in fact up-selling, not taking kickbacks. This is completely legal.
In Wedding Planning/Coordination, it is the client who signs all contracts and makes all final decisions on the choice of vendors. You, the Wedding Planner/Coordinator, are hired as the person to consult about their choices and coordinate the vendors and the couple’s day. Due to your role as a financial & emotional counselor, the trust this requires, and the fact that your job is to suggest the best vendor for your client, taking a Kickback or Finder’s Fee from the vendors you suggest is considered Fraud. You are not suggesting the best vendor for your client; you are suggesting the vendor who pays you the most. This is misrepresentation of your business affiliation. This type of fraud is illegal.
This is not just in Canada! It’s illegal and unethical everywhere.
(Secret Commissions Act 1910, Fair Trading Act 1986)
It is amazing how small the wedding industry is, and how many times that we have heard from vendors that wedding planners are demanding kickbacks, or they will not bring their wedding clients to them. This is illegal, as well as 100% completely against our WPIC Code of Ethics.
*If you are a wedding professional offering a service in Canada, and this has happened to you (by a WPIC alumni) please let us know at email@example.com
Some Wedding Coordinators work solely on kickbacks. This means they do not charge the clients anything for their services. This is discussed ahead of time and shared openly with the clients and wedding professionals involved. Rather than being paid by the clients, they are paid solely by the vendors. The client understands this and therefore there is no fraud and the situation is completely legal.
What to do if you are offered a Kickback?
If you have suggested a vendor based on their merit and the client decides to go with that Vendor, and that vendor wants to give you a monetary amount for doing so, ask the vendor to give the amount to the client as a discount for working with you instead. 9/10 times the wedding vendor will agree. This is how Wedding Coordinators get their discounts and save clients money!
The wedding couple needs to be made aware that they are receiving this deal because they are working with a professional wedding planner whom the wedding vendor has a relationship with. They couldn’t get that same deal just walking off the street.
What if You are Asked to Pay a Fee or Kickback to the Venue or Vendor Just to be Recommended to their Client?
Unfortunately, this is something that is becoming more and more common all across the world. It is tacky and unethical. You should never be referred just because you pay for it. Whatever happened to best practices and ethical behaviour? This usually backfires anyways, because it is not made known to the client, and if they find out a vendor is being recommended because they pay a fee, instead of because they offer stellar service, then who suffers most? Bad news travels fast.
*Kudos to those who are remaining above the board and are creating these lists solely as companies they have worked with in the past, who they refer soley because do a great job and they know that their clients will benefit by hiring them.
Why are Kickbacks Given in the First Place?
Sometimes vendors offer a kickback to ensure that they get repeat business (or the initial business) in the first place. They feel offering an incentive to bring clients to their property or business is worth every penny.
Other Options for Wedding Vendors to do Instead of Offering a Kickback
- Offer great service to ensure repeat business
- Have a great product/venue
- Refer us as wedding planners to your clients simply because we are good at what we do
- Photographers: Share your professional photos with us. This is our greatest tool.