Referral selling

Referral selling is illegal in NSW and businesses cannot engage in such conduct with you.

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Referral selling is when a business persuades a consumer to buy goods or services with the promise of a rebate, commission or other benefit when the consumer provides information that:

helps the business sell to others
information results in sales.

The consumer does not receive the promised benefit unless the information results in sales after entering into the agreement.

An example of illegal referring selling

Bec wants to join a gym but is worried about the cost. Before signing up, the gym offers Bec a 25% rebate on a 12-month membership if she provides the gym the names and phone numbers of 5 friends and the 5 friends all take out a membership. This is illegal.

Penalties

Under Australian Consumer Law, referral selling is illegal and can attract significant penalties. The maximum penalty for each offence is $500,000 for an individual. Body corporates can be charged whichever is greater:

$10 million
3 times the value of the benefit received, or
10 % of annual turnover in the preceding year if the court cannot determine the benefit obtained from the offence.

It is not referral selling for a supplier to promise a benefit to customers for simply providing the names of prospective customers or helping the trader supply goods.

It is only illegal when the promised benefit depends on a future action taking place after entering into an agreement.

Making a complaint

When making a complaint, you should include:

details of the issues you are experiencing
copies of any correspondence that shows how you have tried to resolve the matter.

How NSW Fair Trading will handle your complaint

Your complaint will be reviewed to determine the most appropriate resolution. This may include:

providing you with information to help resolve your complaint
recording the complaint issues to assist in future compliance programs, or
contacting the other party to try and resolve the dispute.

You can lodge a complaint:

Online

If you cannot resolve your matter, submit your complaint by using our form.

Make a complaint

By mail

Post your complaint form and documentation to:

NSW Fair Trading

PO Box 972

Parramatta NSW 2124

Ask a question

If you are unable to find the information you need, you can call us between 8:30am to 5pm on Monday to Friday. You can also use our form to make an enquiry.

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