Legal Definitions - Secret rebate

Definition: A secret rebate is a type of illegal kickback that violates unfair competition laws in most states. It involves offering special benefits, discounts, or rebates to specific customers, suppliers, or contractors that are hidden from the public and not available to others. Secret rebates can harm trade in various ways and can lead to civil and criminal convictions. Depending on the type of secret rebate, it can also violate tax and reporting laws.

• A supplier offers a contractor a 10% discount on all future orders if they agree to use their products exclusively. This discount is not offered to any other contractors and is not disclosed to the public.
• A car dealership offers a customer a $500 rebate if they agree to give the dealership a positive review online. This rebate is not offered to any other customers and is not disclosed to the public.

These examples illustrate how secret rebates can be used to unfairly benefit specific individuals or companies while harming competition. By offering exclusive discounts or benefits, the supplier or dealership is able to gain an unfair advantage over their competitors. Additionally, by keeping these rebates secret, they are able to avoid scrutiny and potential legal consequences.