Legal Question in Business Law in New York

Re: Is Refer-a-Friend marketing campaign legal for my firM?

It's rather difficult to describe what you might be facing with your referral program because, for one thing, I don't know if you will be promoting it to existing customers, via targeted direct mail through a purchased list or online. For another, the way in which the program is described to potential customers and all related advertising materials ought to be reviewed for consistency and legal compliance.

Some fundamental rules (advertising to be truthful, not deceptive or misleading or unfair, etc.) do apply regardless of the medium but a number of states have quirky laws relating to "referral sales" specifically. So you need to know where you may be marketing your products.

On top of it, both federal (FTC) and state law enforcement authorities have been especially vigilant with respect to so-called pyramid or certain illegal multi-tier marketing schemes. Whether a given referral program is or is not unlawful or within the scope of their interest really depends on the facts and circumstances.

Finally, you need to steer clear of anything resembling sweepstakes or lotteries in how you structure your referral program. Some of the laws regulating this area of marketing happen to be criminal in nature and carry with them hefty sentences for violations.

Unfortunately, startup businesses are held to the same legal standards as more established ones when it comes to advertising and marketing so I would advise extreme caution. The regulated nature of your business may impose additional legal requirements.

The above response is in nature of general information, is not legal advice and should not be relied upon as such.