Regarding “Good Word,” pp. 79–81 in the May issue, about rewarding clients for referrals, attorney Richard Feeley of Feeley Mediation & Business Law says: Before launching any reward or referral program, make sure that such programs are not prohibited by state or local laws or regulations. E.g., in at least nine states — Ariz., Calif., Conn., Md., Mich., N.D., Pa., R.I., W.V. — home improvement or home solicitation sale statutes prohibit a seller (including remodelers) from providing any sort of compensation (including gifts) for buyers who give the seller referrals or who otherwise aid in making a sale to another person.
Several states also limit the value of any gift a contractor might give a prospective buyer as an inducement to purchase goods and/or services. E.g., Calif. $5; Md. $25; Mich. $2.50; Pa. $2.50. Thus, it is imperative that the remodeler assure that any reward program is compliant with state and/or local laws and regulations.
