Client
Our client, Dukka Inc, is a technology services company that specializes in delivering comprehensive software solutions to small and medium-sized businesses. To further expand their market reach, they aimed to leverage a referral program to incentivize certain collaborators to refer new clients, ultimately driving customer acquisition and increasing brand loyalty.
Problem
Our client recognized the growth potential in activating their existing customers as brand advocates through a referral program. However, they faced legal challenges in structuring a program that complied with advertising, privacy, and consumer protection regulations. Additionally, they sought to manage the legal risks associated with incentivizing referrals, such as potential disputes over eligibility, misuse, or unauthorized sharing of customer data.
Approach
Our approach was to design a referral program with a solid legal foundation, incorporating clear terms and compliance measures. Key steps included:
- Legal Risk Assessment and Compliance Review: We conducted a comprehensive review of applicable legal requirements, including privacy laws, consumer protection regulations, and advertising standards. This assessment informed program parameters, helping us pre-emptively address legal risks in areas like data privacy, incentive disclosure, and participant eligibility.
- Structuring the Referral Program: To balance compliance with customer appeal, we established key legal elements, such as:
- Clear and Transparent Incentives: We structured a system that provided incentives to both the referrer and the new customer. We ensured full transparency in communicating the reward values and conditions to meet all relevant regulations.
- Eligibility and Anti-Fraud Controls: We established eligibility guidelines that defined who could participate and outlined referral limits to prevent misuse. Terms were drafted to cover scenarios such as fraudulent referrals and ineligible participants, minimizing potential disputes.
- Drafting Comprehensive Terms and Conditions: We prepared detailed program terms and conditions covering participant rights, obligations, and program limitations. Key provisions included:
- Data Privacy Compliance: Terms specified how participant data would be collected, stored, and used in compliance with privacy laws. Consent requirements were established to allow limited data sharing needed for referral tracking.
- Dispute Resolution Mechanism: We incorporated a clear mechanism for resolving disputes, which included guidelines for handling claims of unauthorized referrals, incomplete referrals, and delayed rewards.
- Disclaimer and Limitation of Liability: Provisions limited the company’s liability in cases where rewards could not be issued
Result
The referral program was successfully launched with robust legal protections in place, reducing risk and maintaining compliance with applicable laws. The legally sound structure safeguarded the client’s interests, while a clear dispute resolution mechanism minimized administrative burden. The program continues to drive growth while protecting the client against legal risks associated with incentivized referrals.
“Acelera Law has been there since pre-incorporation. That’s about 4 years now. Acelera Law helped us with setting up shop, structuring and raising financing. Our referral program is one of the many ways in which we have been supported. “
- Keturah Ovio , CEO Dukka
