Mystery Shopping, the law & the attorneys

WARNING: Very long post by necessity

There was a discussion last year about a shopper on a restaurant shop whose meal was paid for by an acquaintance. This was a fee + reimbursement shop. She completed the shop, but was denied the reimbursement. A lively discussion ensued. I asked three attorneys about this situation and said I’d post the results. Apologies for not doing so then, but by the time the third attorney replied, I’d picked up a new freelance client and was working 7 days/week until just a few weeks ago. I was pretty much out of mystery shopping the entire time and never got back here to post the responses.

A recent thread has resurrected the topic. What happens when one is on a dining shop and someone else pays for their meal? Is the shopper entitled to a “reimbursement” when no expense has been incurred? Should the shopper abandon the shop? Should the reimbursement be paid instead as a fee for service because the shopper performed the shop?

Here are the responses from the three attorneys. First, though, all 3 said they couldn’t make a definitive opinion without reading the actual contract (shop instructions and survey). Mystery shopping is subject to the same laws as other contracts, so an attorney doesn’t need to be a “mystery-shopping attorney” to apply contract law. (Although there might be very specific circumstances in which “common practice” might apply.) And since I didn’t, and don’t, know which shop this was, all I could do was give them information on similar shops (fee + reimbursement) that I’ve done. So these opinions are based on the situation as told by the shopper and on general information about the type of shop.

Atty #1: Johns Hopkins School of Law, works for a global financial services firm, is a contracts and tax attorney with almost 35 years’ experience. First, he asked if this situation happened often. I said that several shoppers here over the years had indeed run into this. Since this is a small subset of shoppers, it seems that it’s not a rare occurrence. Uncommon, but not rare. His opinion was that the shopper is owed the $75 if the contract didn’t include specific instructions addressing this possibility. If this situation could be reasonably foreseen, the author of the contract should address it within the contract. The opinion wasn't based on the shopper “deserving” the payment, as many here thought. She was in the same position after the performance of the shop as she was before it. She suffered no damages by not being paid the $75, because the net effect of completing the shop and being reimbursed vs. having someone else pay for her meal is the same. She wasn’t out of pocket for the meal. That she might return the favor at a later date is irrelevant. And she received her shop fee as specified in the contract. The basis of his opinion is that when there’s any oversight, ambiguity, or contradiction in a contract, the party who wrote the contract is held responsible. (I know this is true, since my husband benefitted bigly as the receiving party in a contradictory contract) A contradiction or ambiguity might be, e.g., if the reimbursement had been referred to interchangeably as a reimbursement and as a fee. In that case, the interpretation would be “fee,” because the contract was unclear.

He also said that if there’s a generally understood, widely known common practice that addresses this situation, his opinion might be different. In that case, standard contract law might not apply. However, the shopper would probably be ruled against. But without knowing that, he’s inclined to award the shopper the $75—only because the author should be held responsible for a defect in the contract. However, the $75 is counted as compensation (fee for service), not reimbursement (shopper didn’t incur an expense), and is taxable income.

Atty #2: Sole practitioner, ca. 20 years’ experience, general practice but with strong contracts and corporate experience. His opinion was pretty simple: If someone else picking up the tab made it impossible for the shopper to accurately complete the survey (e.g., she couldn’t determine timings of the server bringing the check and how long it took for the payment to be processed—if the shop included those), she’s not due the $75. If, however, she was able to complete the report accurately and didn’t out herself as a shopper by insisting on a receipt, she should get the payment. His opinion was similar to many forum members’: that, in effect, this was no different than if the shopper had paid for the meal, then the acquaintance had walked over to the table and said, “I meant to pay for your meal, but the server took your payment before I could do it. Here’s $75; have yourself another dinner on me sometime.” He did not address the issue of taxable compensation because he runs from tax law.

Atty #3: Partner in a small firm, Western New England College School of Law, 40 years’ experience, general practice but almost all in contract law (mostly real estate, including heavy corporate representation, but that’s all contract law). To him, there’s no ambiguity or cause for dispute here. If the contract stated explicitly (without contradiction) that there was a fee and a reimbursement, if someone else paid for the shopper’s meal, there’s no $75 due. The reason is because “reimbursement” is a repayment for an expense incurred. That this is mystery shopping doesn’t change that fact. The contract doesn’t need to specify that the payment for the meal must come out of the shopper’s own pocket, because that’s inherent to the meaning of “reimbursement.” He was incredulous that anyone would even try to make an argument for payment of the $75 (in the absence of contradictory or ambiguous language in the contract). He also said that if the MSC paid the $75, out of goodwill (not a legal obligation), it would be taxable income—agreeing with atty. #1. That someone gave the shopper the gift of the meal doesn’t make the $75 from the MSC a gift for tax purposes.

None of the three thought that the end client “getting away with” (as some thought) not having to pay out the money was relevant. Unless the contract included language that obligated the client to pay the $75 regardless of whether the shopper incurred the expense. (In which case it ceases to be reimbursement and becomes a fee for service).

Anyway, those are the attorneys’ opinions.

It seems to me that a) MSCs should include a "what if" clause in the shop instructions covering this situation and b) shoppers should, to avoid a potential problem, abandon such a shop or try to get hold of their scheduler for guidance either during the shop or prior to writing the report, not just go ahead and complete it and "hope" it goes through. .

I learn something new every day, but not everyday!
I've learned to never trust spell-check or my phone's auto-fill feature.


Edited 1 time(s). Last edit at 03/08/2018 03:14AM by BirdyC.

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Thank you, BirdyC and attorneys. smiling smiley

Nothing can be more abhorrent to democracy than to imprison a person or keep him in prison because he is unpopular. This is really the test of civilization. - Winston Churchill
I maybe should add that I know attorneys 1 & 3 personally, and know that they're excellent attorneys (although #3 is so busy he sometimes gets delayed, as he did here). Atty. #2 is a Facebook friend, so I don't know his work personally, but he practices in the Washington, D.C., area, and you have to be good to survive in that arena!

I learn something new every day, but not everyday!
I've learned to never trust spell-check or my phone's auto-fill feature.
Very easy, #2 is correct, the others are not.

There are reasons that a body stays in motion
At the moment only demons come to mind
I would be very interested in knowing what nature of business attn #3 handles. I would guess he defends large corporations.

There are reasons that a body stays in motion
At the moment only demons come to mind
I dunno... he probably negotiates ironclad contracts for them! grinning smiley

Nothing can be more abhorrent to democracy than to imprison a person or keep him in prison because he is unpopular. This is really the test of civilization. - Winston Churchill
@bgriffin wrote:

Very easy, #2 is correct, the others are not.

I'm interested in knowing what you know that attorneys with a combined 75 years of experience don't know, and what section of contract law you're relying on. And, no, atty. #3 doesn't defend large corporations. I didn't imply or say that. He represents corporations in real-estate transactions, not in lawsuits. He also represents individuals like you and me. And does pro bono work on behalf of children.

I learn something new every day, but not everyday!
I've learned to never trust spell-check or my phone's auto-fill feature.
The same thing that Attn #2 knows.

There are reasons that a body stays in motion
At the moment only demons come to mind
I had a bartender recently not charge me for a beer, saying it's on the house, I can tell you don't like it (I took one sip). The bill came without the beer, since I was supposed to have two drinks, I thought they wouldn't accept the report, but they did minus the beer....what's the point if you and the MSC agree (these things happen). I doubt anything would happen to the shopper, just not get reimbursed for that part of the bill....why would they have to pay you for something already paid for. I do agree they could put that in their disclosure instructions, then the problem is solved. This isn't brain surgery where Atty's. need to be called in...just my opinion.....maybe it doesn't happen often enough to re-.write instructions.....

Create a life that feels good on the inside, not one that just looks good on the outside.....
Dr. Judith Wright
@Irene_L.A. wrote:

I had a bartender recently not charge me for a beer, saying it's on the house, I can tell you don't like it (I took one sip). The bill came without the beer, since I was supposed to have two drinks, I thought they wouldn't accept the report, but they did minus the beer....what's the point if you and the MSC agree (these things happen). I doubt anything would happen to the shopper, just not get reimbursed for that part of the bill....why would they have to pay you for something already paid for. I do agree they could put that in their disclosure instructions, then the problem is solved. This isn't brain surgery where Atty's. need to be called in...just my opinion.....maybe it doesn't happen often enough to re-.write instructions.....

I loved getting the attorneys' opinions. It was interesting to see how they broke down the facts of the situation. Their opinions showed me that there might be room in the mystery shopping world for a backup plan for such situations. Now I am wondering if any MSCs and clients will add a provision or two for such situations.

Nothing can be more abhorrent to democracy than to imprison a person or keep him in prison because he is unpopular. This is really the test of civilization. - Winston Churchill
Problem being, all the Atty's were guessing as this has never gone to court (to my knowledge). I'd rather have known from Atty's how to get money back when a company goes out of business and you loss money you have worked for, which happened recently. Shoppers could use legal advice, and a shorter version would have gotten my attention, that's just me, short attention span. The OP put a lot of time into her post, so that is appreciated.

Create a life that feels good on the inside, not one that just looks good on the outside.....
Dr. Judith Wright
While I agree with BG and atty #2, I also find the first point of there being an industry standard for this type of thing to be the more serious deciding factor.

One thing that happens MORE often is the restaurant itself picking up the check due to an issue with the meal. I have had this happen multiple times in the past 15 years and only had an acquaintance pick it up one time. In all cases, my report was accepted and I was only paid the fee. No reimbursement. That seems to be the industry standard.

If one did manage to get the itemized check from a server and explain the situation, there's room some argument of reimbursement.
Even if one believes the shopper should get what was originally to be a reimbursement, when a third party picks up the tab, the payment is not a reimbursement, but income. Even atty #2 agreed that the term "reimbursement" no longer applies, but didn't know what the tax ramifications would be.

I learn something new every day, but not everyday!
I've learned to never trust spell-check or my phone's auto-fill feature.
@SteveSoCal wrote:

One thing that happens MORE often is the restaurant itself picking up the check due to an issue with the meal.

Not even remotely the same thing. I 100% agree the shopper is not due a reimbursement if the restaurant comps the meal. The restaurant has not been paid for the meal so there is no reimbursement due.

In other cases the restaurant has been paid for the meal so a reimbursement absolutely is due.

There are reasons that a body stays in motion
At the moment only demons come to mind


Edited 1 time(s). Last edit at 03/08/2018 01:23PM by bgriffin.
You miss my point. It's not a reimbursement if the shopper didn't pay for it. I'm talking terminology, not whether or not the shopper is due the payment. That's a separate argument.

There's no difference, in effect, if the restaurant comps the meal or a third party pays for it. The net result is that the shopper didn't incur an expense.

I learn something new every day, but not everyday!
I've learned to never trust spell-check or my phone's auto-fill feature.
No, I'm not missing your point, I simply disagree with it. If the client receives payment for the meal then a reimbursement is owed and yes, it is a reimbursement. They are reimbursing the meal and it doesn't matter where the money came from.

There are reasons that a body stays in motion
At the moment only demons come to mind
@bgriffin, if we are simply discussing contract law and not industry practice, I believe the contract would be for the shopper to be reimbursed expenses and paid a fee. The end client's reception of the funds is not part of the shopper contract. It may be part of the MSC contract but that's not what we are discussing here.

That said, having someone else pick up the check could invalidate the agreement between the MSC and client as well.

In any case, this situation is rare at best. Th one time it happened to me I simply rescheduled the shop and went back for a second dinner on another night. No way I'm writing a report when someone else paid for the meal.
Being very candid here, 5 or so years ago, when visiting my SO in Fl. I did a nice restaurant and took him, expecting this to be my treat. He insisted on paying the full bill, and gave me the receipt, which I turned in. They got the report, so does it matter who pays...this is open for discussion, I'm sure many shoppers run into this but won't admit it. My best friend has had upscale dinners with me, and puts down the tip, they get a report for the meal. not in any instructions I've read can you not do this. Curious for Steve or BGriff's opinions.

Create a life that feels good on the inside, not one that just looks good on the outside.....
Dr. Judith Wright
So why doesn't the MSC cut a check to the person who paid for the meal and the shopper?
I've been issued a check from my homeowners insurance company that listed my name as well as a contractors name that completed work on my home(new roof due to hail damage).
If you supply the MSC with the name of the person who DID incur the expense of the meal then REIMBURSEMENT can be made to them, and in turn they can hand you the cash as a GIFT (which is not taxable).

Servimer Regional Manager- Midwest, including Chicago, Wisconsin & Minnesota
Because they are not party to the mystery shopping agreement and it's not their business.

There are reasons that a body stays in motion
At the moment only demons come to mind
As SteveSoCal alludes to, neither the end client, nor for that matter, the friend who pays for the meal is a party to the contract between the shopper and the MSC. The issue is whatever the contract between those two parties is and possibly, if applicable, whatever the common practice is in the industry. If the contract clearly and unambiguously states that there's a "fee plus reimbursement," it's clear that "reimbursement" is not payment for service rendered, but repayment for an expense incurred by the shopper. Otherwise that amount would also be called a "fee." Since reimbursement by definition is made to the party who incurred the expense, and since the person who paid for the meal isn't a party to the contract, then how would a reimbursement be owed or made?

It may not seem fair, but the end client may not be obligated to pay for the shopper's meal in the situation under discussion. It depends on what their contract with the MSC says. And, in fact, that contract might state that if a shopper's meal is paid for by a third party, the shop will be rejected and no reimbursement is due. Of course, we don't know that; how could we? But it's certainly a possibility.

I learn something new every day, but not everyday!
I've learned to never trust spell-check or my phone's auto-fill feature.


Edited 1 time(s). Last edit at 03/08/2018 09:19PM by BirdyC.
So let me get this straight. OP went to three attorneys to get the opinion on why a shopper wasn't paid? OP, kudos to you for spending time on this, yet whatever you do, don't form an LLC to pay the shopper for their silence on this. Especially if its $130,000.
@Eric in Tampa wrote:

So let me get this straight. OP went to three attorneys to get the opinion on why a shopper wasn't paid? OP, kudos to you for spending time on this, yet whatever you do, don't form an LLC to pay the shopper for their silence on this. Especially if its $130,000.

Almost... smiling smiley Another member sought opinions from three attorneys and shared the information here. There is a separate thread in which the OP posted their wonderment about a situation during a meal shop. Someone else paid for the shopper's meal. So there are a few things to consider, mostly stemming from the concept of reimbursement and what, exactly, the shopper's contract said about the expected fee and reimbursement.

Here is a link to the other person's thread, which is called 'What Would You Do?':
[www.mysteryshopforum.com]

Nothing can be more abhorrent to democracy than to imprison a person or keep him in prison because he is unpopular. This is really the test of civilization. - Winston Churchill


Edited 1 time(s). Last edit at 03/08/2018 11:36PM by Shop-et-al.
I’m sensing some confusion about how reimbursements really work. Between the MSC and their client, reimbursement is completely separate from fees. The MSC has to submit those receipts to their client in order to get paid for the reimbursements they issue to shoppers. The MSC isn’t pocketing anything.
There’s also potential for serious legal jeopardy if the MSC gets caught submitting receipts when they know the shopper did not incur an expense. I’m sort of surprised the OP’s attorneys didn’t mention that. Why the client would ever pay out an additional fee because the shopper didn’t manage to complete the shop properly is beyond me.
What’s really mind boggling though, is the thought that a reimbursement may get even be owed when there was no expense. I guess I should start demanding reimbursement for apartment shops when I don’t pay an application fee.
Not a single shopper would ever do a restaurant shop for just the fee since the fee is either nonexistent or miniscule at best. The reason we do these shops is the overall value of the fee plus reimbursement is reasonable enough to warrant the onsite observations plus the narrative heavy reporting that is required. Comparing a restaurant shop to an apartment shop is like comparing apples to oranges. A shopper takes an apartment shop because the fee makes the job worthwhile by itself.

Thank goodness I'm too stupid to be mental!
How so? The reimbursement is for the amount spent. When it actually covers everything that was spent. You don’t pocket anything from reimbursements. If the reimbursement is “up to” an amount, you don’t get back more than you spent.
I would encourage those of you who did not read the original post last year to read it for background info on the dilemma. It's been a year but as I remember it the bill was paid by someone the shopper actually knew...not some guy across the way who thought she was cute or the bartender or restaurant comping the meal. Since I have never chanced taking someone on a mystery shop without letting them know I am doing a shop so they do not blunder and get my report in trouble I cannot imagine someone at my table with me picking up the tab. But in this case the shopper felt like she needed to return the favor of that $75 expense that someone she knew made on her behalf.
I am just mentioning all this since it seems some do not know the background on this dilemma.
It's simple, when I consider a restaurant shop, I first decide if I like the food. Second, I look at the work required versus the value of the restaurant to me. Finally, I look at the fee PLUS reimbursement and weigh that against #2 above. If the fee is $10 and the reimbursement is $175 and I like the food and the work isn't onerous, then I will consider taking the assignment. To me, this shop is WORTH $185 to me and not worth just $10 for the fee.

If the MSC company came to me and said, "We'll give you $10 to go to restaurant 'xxx' where you will required to spend $175 without getting reimbursed and have to make onsite observation plus spend hours writing a lengthy report." I'd probably laugh in their face and hang up the phone. Wouldn't you? The real value in a restaurant shop, for me, is the lifestyle enhancement and not the fee.

I may not pocket any cash directly from the reimbursement, but it has the most value to me in accepting the assignment. I would not do the assignment otherwise. The apartment shop is valued differently. Since there is no reimbursement, I would look solely at the fee versus work required to see if the shop was worthwhile. Since I get no lifestyle benefits out of looking at an apartment, this would strictly be a fee based shop.

Thank goodness I'm too stupid to be mental!
I have read that post. Regardless, if the shopper didn’t incur an expense, there’s no reason the client should reimburse. What I was pointing out was how some on this thread seem to feel they are automatically entitled to the reimbursement even if they didn’t spend money.
But you’re only making $10. I agree that a restaurant shop might not be worth the effort without being reimbursed. But you don’t get more back than you spend. That’s the point I was trying to make.
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