Legal Question in Business Law in Virginia

Re: Paying commission

It is perfectly legal unless there is a specific

industry rule against it. For example, lawyers

cannot pay referral fees to non-lawyers because

the regulations unique to only lawyers prohibit it. But there is no general rule against paying anyone you want anything you want.

So, unless there are rules governing travel

agents that don't allow it, it is legal.

Specifically, if the rules for travel agents

don't allow them to receive commissions for

related services, then it would be perfectly

legal for YOU to pay or offer commissions.

But they would risk their standing in the travel

agent community (potentially, IF there is such

a rule) by accepting commissions.

So, you see, it is a question of the industry's

own INTERNAL rules, and NOT a law that affects

everyone generally. There may be an internal rule that affects THEM as travel agents that does NOT affect you as a non-travel agent.

The only other time that there is a concern

about paying commissions like this is if you

occupy a special position of trust, and the

commission would create a conflict of interest.

I don't see anything in this situation like that.

For example, Marsh & McLennan, a major insurance

broker, got in trouble because their job as a

broker is to search out and recommend the BEST

insurance policy for the benefit of their clients. However, Marsh received commissions

from a particular insurance company IF they

chose that one insurance company. So they were

not choosing the best insurance company for their

client, but were steering clients to the insurance company that paid them the kick-back.

The reason why this is a legal problem is that it

was a violation of their fundamental responsibility to their clients. Their JOB, for which the clients were paying, was to choose the best insurance policy for their clients, not the one that made Marsh the most money.

But that has nothing to do with you. It would be like you charging for arranging a visa and then NOT DOING THE WORK AT ALL, for which you took money. Marsh did not do what they charged money to do... find the best insurance policy.

You need to investigate whether there are any special regulations unique to travel agencies (which would be INTERNAL to the travel industry).

But I am aware of no general legal rules that would restrict you in any way, especially in business-friendly Virginia.

If there is any lingering concern, you can always try two other approaches:

1) Subcontracting. The travel agency charges a fee for the service, and then pays you to implement the service (fulfillment) at a slightly lower price. This is not a commission. This is them hiring someone to assist them in performing a service.

2. Advertising. Pay them a flat fee per month for displaying and distributing your brochures and applications to their customers. A commission is based on success. A flat fee is unconditional.