Legal Definitions - kickback

A kickback refers to a secret payment, often a portion of a larger sum of money, given to someone in exchange for a favor, preferential treatment, or to secure a contract or business deal. These payments are typically illegal or unethical because they involve an undisclosed agreement to influence a decision for personal gain, rather than based on merit or fair competition.

Here are some examples to illustrate the concept of a kickback:

• Imagine a scenario where a pharmaceutical sales representative secretly offers a doctor a percentage of the profits from every prescription written for their company's new drug. The doctor then prioritizes prescribing this drug to patients, even if other, more suitable options exist. This secret payment to the doctor is a kickback because it influences the doctor's professional judgment for personal financial gain, rather than solely for the patient's best interest.

• Consider a government official responsible for awarding contracts for public works projects. If this official secretly demands a 10% payment from a construction company in exchange for ensuring that the company wins a lucrative road-building contract, that payment is a kickback. The official is abusing their position of power to extract personal profit by unfairly influencing the contract award process.

• In the retail industry, a store manager might receive a secret payment from a particular supplier to ensure that the supplier's products are prominently displayed and heavily promoted in the store, even if those products are not the most popular or profitable for the store itself. This undisclosed payment from the supplier to the manager is a kickback, as it influences the manager's decisions about product placement and promotion for personal benefit, potentially at the expense of the store's overall success.