The Showroom

CNCDA Says Tesla’s Referral Program Violates Bird-Dogging Ban

September 01, 2015

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SACRAMENTO, Calif. — In a letter to the California Department of Motor Vehicles (DMV), the California New Car Dealers Association called on the agency to investigate Tesla Motors’ referral program, which the CNCDA said constitutes “bird-dogging.”

On July 29, Tesla announced a new referral program that promised to give new buyers a $1,000 discount if they were referred by a current owner, who would also be rewarded with a $1,000 discount on his or her next purchase or service visit. The program runs through the end of October.

“While many other licensed dealers would like to offer similar referral fees to existing customers, California law flatly prohibits the practice announced by Tesla based on several statutes,” CNCDA President Brian Maas wrote in a letter to the DMV, dated Aug. 26. “A dealer that chooses to disregard these myriad laws and use unlicensed customers to sell cars on its behalf is risking being accused of committing a criminal misdemeanor, which can lead to fines and administrative action up to and including revocation of a dealer's license.”

Under the California Vehicle Code, Maas explained, Tesla customers would be acting as illegal salespeople when they accept the “bird-dog” fee of $1,000. “So, not only is Tesla putting itself at risk, but it is also putting its vehicle owners at risk who may be induced to act as unlicensed salespersons,” Maas wrote, in part.

Tesla faced similar opposition in Virginia, where the Virginia Motor Vehicle Board contacted the automaker within 10 days of the launch of its referral program. In response, Tesla altered the program in the state by directing the whole $2,000 incentive to the vehicle buyer.

“If Tesla is compensating current owners $1,000 for selling a Model S to their friends, they are out of compliance,” said Virginia Motor Vehicle Board Executive Director Bruce Gould of the program. “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.”

This is not the first time the CNCDA has alerted the DMV to alleged advertising violations on the part of Tesla. Nearly two years ago, the association contacted the DMV about Tesla’s advertised leasing prices, which are based on how much a buyer would save in gas each month. In response, the DMV opened but never concluded its investigation — something Maas said “emboldened” Tesla to launch its referral program.

“When one licensed entity violates the law, it gains an unfair advantage over competing dealers,” Maas added. “Some dealers may even choose to engage in ‘self-help’ in order to compete and offer their own referral programs. This is why the department must immediately step in to restore balance to the market by ensuring Tesla conforms to all applicable legal requirements.”


  1. 1. kyle lahm [ September 05, 2015 @ 08:33AM ]

    This is an absolute communist law on the books- why not let customers send their friends and be reimbursed for their recommendations- it hurts no one. And I don't want to hear that professional salesman bullcrap- they gotta buy it from a salesperson irreguardless.

  2. 2. Rob [ October 20, 2015 @ 07:33AM ]

    So, you can refer your friend to Dish for cash, but not to Tesla.

  3. 3. Ralph [ September 14, 2016 @ 01:58PM ]

    Tesla is the most transparent pricing I have ever seen. No matter your gender, color or negotiating skills, everyone pays the same. Ridiculous dealerships trying to stop Tesla..good luck.

  4. 4. David [ May 18, 2018 @ 01:41PM ]

    I have no comment in regards to the referral program. However, for anyone to think that Tesla has the most transparent pricing than any other dealer is what's really Ridiculous. Every car manufacturer has a MSRP just like Tesla. MSRP is MSRP. So if Tesla sells their vehicles at MSRP, offers no negotiating and does not inform its buyers what was the cost to manufacture that vehicle, how is that "Transparent" ?

    Now on the other hand, other manufactures sells their vehicles at MSRP as well but they are willing to sell a vehicle at a agreed upon price less than their MSRP to earn ones business over another dealer or brand. Everyone knows their MSRP and what their invoice is. So because of that, they are labelled the "Non-Transparent" party and now everyone hates them? Yet you love Tesla because they are unwilling to discount their cars and tell the public what their cost to make their cars because it just so happens that they have no other major competition at the moment. Giving them the right to Charge a Higher price, regulating the battery charge limits to a set kws but it can reality offer more power but you have to pay more to unlock those capabilities
    on a battery you already paid for. If you need service, you have to go through them and no other EV mechanic.

    Sounds like some people like Monopoly and no discounts. Genius!


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