There was no payment for referral of this vendor! Photo by Magical Moments Photography.
The other day I was talking to Howard Kier of Magical Moments Photography about an upcoming job we are doing together. We got to chatting, once business was done, and started to talk about some of the scams we have run into in this business. I told him about the owner of a small, second-rate venue who had leaned on me to pay him 10% of my fee any time he referred a client to me. Howard told me about the time he walked into a venue to start shooting photos for a wedding when the owner hit him up for a $100 fee just to work there.
And then he told me about some new rules put out by the Federal Trade Commission that regulate payment for endorsements. He has even gone so far as to call the staff contact at the Bureau of Consumer Protection (a bureau of the FTC), one Richard Cleland, to clarify what effect the new rules have on the wedding industry and on the kind of payments that occur routinely.
As you may know, it is common for a vendor to pay a planner a percentage of their fee for a referral to a client. Some venues also charge vendors a fee or percentage for the privilege of being on their preferred vendor list (or sometimes require them to advertise in their in-house magazine at the usual rates). Under the new FTC rules, these transactions are legal ONLY IF they are disclosed to you, the client and consumer.
Here is how Howard described his conversation with Mr. Cleland:
Richard said when a venue provides a preferred vendor list, it is an endorsement from a trusted source. Any payments made by vendors to be on that list do fall under the endorsement rule and will have to be disclosed.
As I understand the rules, your wedding or event planner, is also a “trusted source” and should, therefore, also disclose any payments made by vendors for the privilege of a referral. So, you have the right to ask whether there have been payments for referrals and you have the right to receive an honest answer. (And if you have evidence of any funny business, you can complain to both the FTC and to your state’s Attorney General.)
In my experience, most vendors are honest folks who play by the rules. Some of them may not yet be aware of the new rules requiring disclosure of payments. And there are a few who are not to be trusted. Use your best judgment. And, as always, you can count on some of us, like me, who say up front, “I do not take payments for referrals. Ever.”