Are Your Vendors Paying Kickbacks Without Your Knowledge?

Every couple of years the issue of kickbacks surfaces in our local event planning community. A kickback is a fee paid by a vendor to another vendor or facility for the "privilege" of doing business with them. This is not yet a problem in the Boise area, but it is becoming increasingly common in other areas of the country and is beginning to rear its ugly head here. The Better Business Bureau considers the practice unethical and we agree.

Here is how it works. A facility might offer an event planner or a caterer a kickback on the amount that you, the client, pays for the rental of a facility. This kickback is paid to encourage the planner or caterer to persuade you to choose one facility over another because the planner or caterer will personally benefit from your choice (without your knowledge, of course). Therefore, you might be encouraged to choose a facility that charges $2,000 over a facility that charges $1,500 because a portion of the $2,000 fee will be returned to your caterer or planner "under the table."

Another version of this is facilities that charge your planner, caterer, decorator, rental center, bar service, and other merchants a percentage of what they earn from you for the "privilege" of holding your event at their facility. In this case, those fees, usually 10% to 15% of your bill, are generally passed on to you in the form of higher costs, again without your knowledge.

In both scenarios, you may be paying more for your event without your knowledge and you may unwittingly have your choice of locations or vendors manipulated by your planner, caterer, or another merchant for their personal benefit.
 

Occasionally, event facilities will offer a discount during certain times of the year when business is typically slow, such as January - March. This is good business as long as the discount is passed on to you, the consumer, not pocketed by your caterer or planner.

If you feel that any of your merchants may be engaging in the unethical practice of seeking or accepting kickbacks, ask them. Also ask the venue you are considering renting if they pay a "referral" or "finder's" fee to your planner or caterer. It is possible that they are willing to pay such a fee to vendors who request it. Your vendors should not request it. It is not a cost of doing business, but rather is a deceptive practice that hurts you, the consumer. If you feel uncomfortable with the business practices of any merchant with whom you are considering doing business, choose another merchant. You have the right to know exactly what you are spending your money for and to receive the full value of your money.
 

Note: Since posting the above information it has been brought to our attention that not only are kickbacks unethical, but they may violate Idaho's consumer protection laws. A facility in Boise recently attempted to charge merchants wanting to work at their facility a 20% kickback. Fortunately, the fee was discontinued shortly after it was initiated. If this type of "surcharge" is passed on to the consumer, then the law has been violated. Do we really want to go there?