Referral selling

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Referral selling is when a consumer is persuaded to buy products or services by promises of a rebate, commission or other benefit for supplying information that helps the business sell to other consumers, and the consumer does not get the promised benefit unless some other event happens after the agreement is made.

Promising future commissions, rebates or other benefits that depend on other events, such as subsequent sales, is an offence under the Australian Consumer Law 2010 (ACL).

It is not ‘referral selling’ for a supplier to promise a commission, rebate or other benefit for simply providing the names of consumers or helping the business supply products or services.

The maximum civil pecuniary and criminal penalties for a body corporate are the greater of:

  • $10 million, or
  • three times the value of the benefit obtained from the offence, or act or omission, by the body corporate and any related bodies corporate if the benefit obtained can be determined by the court, or
  • if the court cannot determine the value of the benefit, 10 per cent of the annual turnover of the body corporate.

The maximum penalty for a person is $500,000.