California Dealers Challenge Legality Of Tesla Referral Program
This is surely not the first time that the Tesla Referral Program has been attacked, but now it’s coming out of California on a more official level.
We’ve heard many arguments against the Tesla Referral Program in the past, partly because OEM automakers don’t/can’t run such programs (although it’s not entirely uncommon to see dealerships offer special giveaways, or really any company encourage you to “Tell A Friend” or “Share”). The other issue that’s been cited lately is that some people have a wider audience with which to provide their referral code (i.e. YouTubers, Bloggers, etc.). CEO Elon Musk has addressed this concern.
The California New Car Dealers Association (CNCDA) claims (to no one’s surprise) that Tesla is including owners as the “middle man” or “an unlicensed salesperson” by encouraging them to get others to buy the vehicles. The recent complaint comes after Tesla has recently run six separate, incentive-based referral programs over a short time period.
The CNCDA filed an official complaint with the California Department of Motor Vehicles (DMV). This is the third complaint the dealers’ association has sent over the course of a few years. The CNCDA says that Tesla is “bird-dogging” by encouraging owners to sell their cars. California law says that it’s illegal to offer discounts, commissions, or rebates to unlicensed salespeople, with the reason for the incentives being specifically that the person must sell, or aid in the sale of a product. CNCDA president, Brian Maas, complained:
“Tesla continues to widely publicize its now years-long strategy to sell cars using current customers as the middlemen.”
In 2015, the dealer group filed a complaint about Tesla offering $1,000 off the purchase of a vehicle for the owner and the new purchaser. The same type of complaints came out of Virginia and Tesla ended up changing the incentive to give the full $2,000 to the new buyer, and no cash to the referrer.
This new complaint states that the electric automaker has run six new programs in a short time, in an attempt to not get caught for the illegal practice. Incentives in the recent programs — free Supercharging, $1,000 vehicle discounts, pre-qualification to purchase the upcoming Tesla Roadster 2.0 for 10-percent off — allow owners to up the number of perks they receive based on how many referrals they round up.
As you can see, there’s a lot of gray area here. Tesla owners are not acting as official salespeople in any way, shape, or form. No one can tell a person that they can’t tout their vehicle and try to convince friends and family to follow suit. If the company wants to offer a thank you gift, so be it. However, the “aiding in the sale of” part is a bit sketchy.
Telsa does not own any franchised dealerships. The way that the company sells its cars is completely different from OEM automakers. Tesla doesn’t advertise in the traditional sense, but this is really the automaker’s form of advertising. It will be interesting to see how this one plays out.
Source: Automotive News