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