Tesla’s $1,000 Referral Program Is Against The Law In Virginia


Turns out there are laws on the books in the state of Virgina (probably other states too) that do not allow for Tesla’s $1,000 refer a friend program to operate as Tesla motors intended.

According to Automotive News:

“…under Virginia law, the practice of compensating people who are not licensed by the state to sell cars — known in the industry as “bird-dogging” — is illegal.”

Tesla Not Allowed To Pass On Referrals In Virgina

Tesla Not Allowed To Pass On Referrals In Virgina

This means that the current Tesla Model S owners who refer buyers will not be able to get the $1,000 referral bonus.  Instead, Tesla has modified the program so that $2,000 goes to the buyer.  The individual doing the referring gets $0.

Automotive News adds this quote from Bruce Gould, executive director of Virginia’s Motor Vehicle Dealer Board:

“If Tesla is compensating current owners $1,000 for selling a Model S to their friends, they are out of compliance. If a Ford dealer was giving out dinner coupons to customers for referring their friends, we’d say the same thing. What’s the difference between selling a vehicle and convincing someone to buy a vehicle? There has to be a line.”

Ricardo Reyes, a Tesla spokesman, spoke out in regards to the issue in Virginia:

“This law was enacted a long time ago to prevent rogue salespeople, not for preventing friends from recommending products they love.”

Separately, Tesla reached out to its Model S owners in Virginia to make them aware of the problem:

“Our Referral Program was never designed to make you a salesperson.  Nevertheless, due to the position taken by Virginia regulators, we are making one change to our Referral Program for our customers in Virginia.”

Details of Tesla’s referral program (without changes specific to Virginia) can be found below:

Referral Program

Anyone who orders a new Model S before October 31st using the referral link of a current owner will get $1,000 off the purchase price. In return, the current owner will get a $1,000 discount that can be applied to a new car, service center visit or accessory. Referral discounts are limited to ten and are awarded on a first to purchase basis. New orders must be placed prior to October 31, 2015.

In addition, those who make five referrals will receive an invitation for them and a guest to attend the Gigafactory grand opening party. Those who make ten referrals will get the right to purchase a fully loaded Founder Series Model X, which is not available to the public, for the price of a base-level Model X—roughly a $25,000 saving. The first person to make ten referrals will get a fully loaded Model X for free.

We know that without our customers we would not be where we are today. This is our way of thanking you for continuing to build the Tesla community.


You must be a current Tesla owner to make referrals and cannot refer yourself. Discounts will be available for you to use when your friend’s order becomes non-refundable. You can use discounts toward a service center visit for your Tesla, to buy accessories or even a new Model S. Discounts are not transferrable and cannot be used to make monthly payments, purchase pre-owned Model S, or reserve Model X.

Free Model X

The first person to refer ten friends in each sales region— North America, Europe, and the Asia-Pacific — will receive a free Model X. They will be invited to configure their Model X once all ten friends have taken delivery of their new Model S.

Gigafactory Grand Opening Party

The Gigafactory grand opening party will take place in Nevada at a date to be determined in April 2016. Customers who make five referrals will receive two tickets to attend the grand opening party. These customers will be responsible for the cost of their own travel, lodging, and other incidentals. Tesla will provide transport to and from Reno, Nevada for the grand opening party.


Discounts will automatically be applied to the purchase price of any new Model S. Discounts on service and accessories will be available beginning August 15, 2015. Remaining discounts will expire on December 31, 2016.

Good Faith

We introduce programs such as these in good faith and expect the same good faith in return. Please note that we may withhold credits, discounts or other awards where we believe customers are acting in bad faith or otherwise acting contrary to the intent of this program. We cannot cover every nefarious scenario, nor will we attempt to, but we do promise to be fair and reasonable.

Source: Automotive News

Category: Tesla

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19 responses to "Tesla’s $1,000 Referral Program Is Against The Law In Virginia"
  1. Ed says:

    Regulatory capture.

  2. Speculawyer says:

    “rogue salespeople”? Is that supposed to be a problem?

  3. David Murray says:

    Saturn used to do the same thing, only I believe it was $100. I wonder how they dealt with this law.

    1. NADA wasn’t out to destroy GM / Saturn, since their pockets were lined with those referrals.

    2. ModernMarvelFan says:

      Was it a state by state program or national program?

      My Georgia Saturn dealers never had that promotion…

  4. ffbj says:

    Also Tesla confirms delivery of Model X by Sep 30th.

    1. viktor says:

      Where did they confirm this?

        1. ffbj says:

          tks, forgot the linkage.

  5. Anonymous says:

    “If Tesla is compensating current owners $1,000 for selling a Model S to their friends, they are out of compliance.”

    They’re not selling shit. The transaction does not occur with them. It occurs with Tesla and the buyer. This is “Word of mouth”. So should all sales that occur from “Word of mouth” be banned?

    For Tesla, this is just paid advertising. I guess that should also stop in Virginia too right? All pitchmen and spokespersons should all be banned because they got paid to send customers to buy a product?

  6. Anonymous says:

    Here’s a good article, old but still valid…

  7. I pointed this out directly to Tesla when I got the email about the program, and on a few EV forums. Never got anything back from Tesla other than “Oh it’s all ok” from a low level rep. (email was sent to office of Elon Musk)

    Disappointing, frankly to see such a poor level of competence on auto sales law compliance from Tesla. Especially at this late stage in the game.

    Virginia is not the only place they have a problem. Bird dogging cars is illegal in most states.

    Disappointing because I would have been happy to participate in the referral program in a big way, having already given over 1,200 people the opportunity to drive my Model S through the Electric Car Guest Drive events.

    Get it together, Tesla.

    1. no comment says:

      i’m less inclined to see everything as a “conspiracy” against tesla. these “bird dogging” laws are generally good consumer protection laws. without them, car companies could use third parties to make bogus claims, and when the whole thing blows up, the car company can try to say: “it wasn’t me”.

      the tesla referral is not advertising: when you pay for advertising, you pay regardless of whether the advertising was effective. the other thing about advertising is that the advertiser “owns” the content in the advertisement. when a car company uses paid “referrals” from independent persons they don’t “own” the content of what that person says.

      when you pay a third party what effectively amounts to a commission conditional on a sale, that third party becomes your agent; if state laws say that you can only use licensed agents, you should not be able to skirt the law by using unlicensed “bird dogs”.

      1. Pushmi-Pullyu says:

        “no comment” said:

        “the tesla referral is not advertising: when you pay for advertising, you pay regardless of whether the advertising was effective.”

        That’s a semantic argument. The effect of this incentive will be to promote word-of-mouth advertising for Tesla’s cars. Whether or not it fits your definition of “advertising”, it’s certainly a paid promotion. That definitely qualifies as advertising to me.

        1. no comment says:

          no it is not semantics, what the tesla program does is to give people the incentive to act as tesla salesmen because they get a “commission” on each sale that they produce. a salesman is not “advertising” a salesman is a person who has an incentive to get you to buy something such that the salesman realizes monetary gain when you make the purchase. if a state regulates sales activity by auto salespersons, it makes sense that the state would not want auto makers to use “bird dogging” as an end run around what is otherwise regulated commercial activity.

          when you are telling a friend about a product through “word of mouth”, it’s generally your free speech right to do so. but if you’re getting compensated for your “word of mouth” then it’s not “free speech” anymore, it’s commercial speech, which is subject to regulation.

        2. Nix says:

          It is semantics in the same way that you might claim you didn’t shoplift, you just put a watch on your wrist and walked out the door of the store. You might claim that all you were doing was putting a watch on your wrist, and walking. But put together that’s shoplifting.

          I actually believe this program could become illegal in Colorado if anybody exceeded a certain number of referrals in a 1 year period. But it has been a while since I’ve read those laws, so I’m not sure. Although if my hunch is correct, it wouldn’t be Tesla that would be violating Colorado law, it would be the Referrer.

  8. Pushmi-Pullyu says:

    This law may not be quite as stupid as the State law which says that any woman driving a motorcar must have someone walk in front waving a red flag, but it’s close.

  9. Ken says:

    Never new it was illegal in some states. Here in NJ, my dealer happily gave me $100 check when someone i knew also bought a Leaf. And the motorcycle shops i worked at all gave you a gift card if you brought in a friend who buys a motorcycle. It’s a very commen process here in my area. Zero motorcycles has the exact same promo going on right now. If you refer a friend and they buy a Zero, you both get a $250 gift card. So its not just Tesla.

    1. TomArt says:

      That would be great, if these corporate shills go after Tesla on this, and end up wiping out all forms of referral programs in the state! Excellent. The fools in NADA’s pocket will hopefully be missing a few proverbial toes on this one!