Tesla Referral Program Violates The Law

Tesla Model S (Credit: Tesla Motors)

Poor Tesla Motors seems to constantly be running afoul of the law these days, especially with quite a few states banning direct auto sales within their borders. This time around, it’s the automaker’s new referral program that’s the issue.

According to multiple reports, in at the state of Virginia it’s illegal for Tesla to pay a $1,000 fee for referring anyone to the brand. It’s a simple fact that in Virginia, if you want to get compensated for the sale of a car that’s not yours, you need to be licensed to sell cars in the state. The action is called “bird-dogging” and it’s likely illegal in numerous other states as well.

One has to wonder if the referral program was run past Tesla’s legal counsel before it was announced. Whether it was or not, the oversight was a pretty big one, considering that it once again is casting the company in a less-than-favorable light. Rivals and people who have a bone to pick with the electric car maker have been citing the whole thing as yet another example of how Tesla competes unfairly.

Tesla has expressed frustration with the Virginia law, stating that it was established to reign in “rogue salespeople, not for preventing friends from recommending products they love.” Of course, Tesla owners in Virginia can still recommend the company to their friends, just they don’t get monetary compensation in return.

Fixing the referral program in Virginia and any other state is simple. Already, Tesla has announced that it will stop giving the referral fee to people in Virginia and instead will give $2,000 to buyers.

For everyone living in states without laws against bird dogging, there are other incentives to refer friends to Tesla. Among the other prizes at stake is a free Model X and tickets to the grand opening part for the company’s new Gigafactory in Nevada.