What is a Kickback?

Kickback is the payment of a certain amount of money or other consideration made in return for something, such as a reward for providing some sort of service or privilege. The payment is usually made under the table, outside of the normal activities of an organization or business. In many countries, kickbacks are illegal and can be considered a form of bribery, and thus are against the law.

A kickback can involve any type of offer, monetary or otherwise, including money, food, tokens, cars, or any other type of benefit. Generally, kickbacks involve two parties exchanging something illicitly for some kind of favor. In some cases, kickbacks can be used to simply reward or show favor for someone, while other times, a kickback may be a way for a company or public official to acquire an illegal benefit from conducting business with another party.

Examples of Kickbacks

A kickback most commonly occurs in business contract scenarios. For instance, a contractor may offer a kickback to a business for awarding them a specific contract, or in return for having their bids accepted. A government official may accept a kickback in return for awarding a certain business a government contract.

Kickbacks can also occur in other scenarios. An employee hired by a company may receive a kickback in return for supplying their employer with better products or services than necessary. Other examples of kickbacks include businesses giving employees a certain amount of money when they refer someone to the company and receive a commission, or when a company rewards a customer with a kickback in return for buying in bulk.

Legality of Kickbacks

Kickbacks are illegal in many countries and can come with serious consequences. The U.S. government has passed anti-kickback regulations to prevent individuals and businesses from engaging in the corrupt practice. The government has also implemented rules to monitor and investigate potential kickback activities, and any violations of the law can come with steep fines, imprisonment, and other penalties.

Kickbacks should always be avoided. It is not only unethical and corrupt, it violates the trust between two parties and can lead to serious legal repercussions. Any company or person engaging in kickbacks should be aware of the potential penalties and risks associated with the practice.