Why are Kickbacks and Referral Fees Illegal for Wedding Coordinators?

 

 by Danielle Andrews Sunkel

Let me first preface this article by stating that I am not a lawyer, if any legal advice is needed, please contact a lawyer. 

Definiton 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.  I will do my best to explain the difference to you. 

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 Coordination, it is the client who signs all contracts and makes all final decisions on the choice of vendors.  You, the Wedding 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. 

Some Wedding Coordinators work solely on kickbacks. This means they do not charge the clients anything for their services. 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, ask the vendor to give the amount to the client as a discount.  This is how Wedding Coordinators get their discounts and save clients money!

Hope that helps!