Secret Rebate Law and Legal Definition

A secret rebate is a kickback of money by a business to a "preferred" customer, or to the one who directed or influenced the purchaser to buy from such seller. It is not offered to the public. Kickbacks and secret rebates are illegal in most states as unfair business practices and may result in criminal penalties or the invalidation of a written or oral contract which involvess such a secret rebate.

For example, in California, secret anti-competitive rebates, such as in selling cars, are prohibited by state law and a retailer can sue a competitor for receiving an illegal secret rebate.