Secret Rebate Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Secret Rebate, written in plain English, along with examples of how it is used.

What is Secret Rebate?

(n) A secrete rebate is the undisclosed discount allowed to any customer which was not generally applied as a business practice or it was not a published discount. Secret rebates are generally given unaccounted and resorted as an unfair business practice

History and Meaning of Secret Rebate

Secret rebate refers to an undisclosed discount given to a customer that is not a published or general business practice. This practice is considered unfair and illegal in most jurisdictions. The rebate is secret because it is not visible to other customers, making it impossible for them to benefit from it. Secret rebates are often given to select customers to influence them to buy more products or services from the supplier. The rebate can take several forms, such as cashback, free products, or services.

This practice is not new, and it has been in existence for many years. The aim is to reward loyal customers by offering them better prices than their competitors. The practice was prevalent in the early 20th century when manufacturers provided discounts to dealers who agreed to sell their products exclusively. This enabled the manufacturers to have a significant market share, and the dealers benefited from exclusive access to the products. However, over time, this practice evolved and became more sophisticated, resulting in secret rebates being offered to a select few customers.

Examples of Secret Rebate

  1. A drug manufacturer offers a secret rebate to a hospital to incentivize them to buy their products over those of their competitors.
  2. A supplier offers a secret rebate to a retailer to encourage them to stock their products over those of their competitors.
  3. An online retailer offers a secret rebate to a select few loyal customers to encourage them to buy more products.

Legal Terms Similar to Secret Rebate

  1. Unfair business practices - These are business practices that are considered unethical or unfair to competitors or customers.
  2. Kickbacks - A kickback is a payment made to someone who has facilitated a business transaction, often given in secret as a reward.
  3. Price-fixing - Price-fixing is an illegal practice where suppliers collude to set the price of goods or services to the detriment of customers.