FAM Trip Abuse: A Legal and Ethical Dilemma

View of a tropical island

Recently reported in the news: An association CEO traveled to a well-known island destination for a 5-day FAM trip to evaluate sites for the association’s lucrative annual meeting. The island’s convention officials met with her, paid her airfare, and provided local accommodations and other VIP benefits. But after the CEO returned home, news reports revealed to island officials that the CEO had been terminated from her position several months earlier for spending association funds on personal expenses. Further, current association officers never heard of plans to host the meeting at the island destination. The annual meeting will probably never happen.

This is just the latest in a familiar scenario, bringing to mind some important issues:

What could island convention officials have done in advance to make sure the FAM guest might actually plan a meeting at their destination, rather than just enjoy a free junket? 

This is a question that no one wants to contemplate, because it means that planners can’t be trusted not to abuse a traditional means of marketing to meeting planners. But the reality is that destinations need to consider pre-screening their planners. Things to look for include verification of employment, evidence that the planners control the site selection decision-making progress, and history demonstrating that the FAM destination would fit within the group’s criteria for meeting locations. In some instances a simple Google search would be sufficient.

Verifying a planner’s qualifications for a FAM visit should be a best practice even for destinations with no prior problems. In the current climate of cost-consciousness and accountability it’s important to invite only qualified planners on free or reduced-cost visits. To skip some sort of screening process increases the likelihood of waste in any FAM program.

Could the association that formerly employed the CEO be liable for expenses she incurred when she visited the island purportedly as the group’s representative?   

Maybe -- the answer depends on the facts of the situation. If the employer did nothing to alert outside parties of her termination, including allowing her name to remain on its website as the CEO for months after she left, the group may bear some liability under an “apparent authority” theory. This would be an especially critical issue if the former CEO actually signed a contract with hotels for the meeting. 

The best practice is for associations and companies to update their websites and contact lists regularly to account for personnel changes, including senior employees, officers, and directors. Groups should also take steps to make sure that suppliers and prospective business partners know of changes amongst decision-makers.

Event hosts can also reduce their exposure to liability by creating internal rules for personnel accepting FAM trips, as well as other types of discounts and gifts from suppliers. These rules should be in writing, and list clearly the personnel allowed to accept incentives and gifts. A requirement that any discounts or freebies be reported in writing to association leaders is also a good idea.

Is it illegal for a planner to accept free airfare, accommodations, and other benefits associated with a FAM trip when he has no intention of locating a meeting at the host location? 

It may be illegal. But even if not, that doesn’t necessarily absolve the planner from liability. This is particularly true if the FAM sponsoring organization implemented a pre-screening process where the planner was required to supply qualifying information, and the planner replied with false answers in order to receive a free or subsidized trip.

In that case, the planner – and possibly his employer  -- may be subjected to a civil lawsuit from the FAM sponsor seeking reimbursement of its costs. Such lawsuits are rare, but likely to become more common should the instances of FAM trip abuse continue to increase.

In sum, FAM trips are another area that requires due diligence from both destinations and meeting sponsors. The failure to implement controls can lead to waste and abuse of this important tool for business development. Suppliers in particular should consider creating due diligence plans to ensure that their free and discounted benefits will reach actual business prospects.  

Final Note: This blog is not “legal advice”; rather, it’s a discussion intended to make you think and draw your own conclusions. Legal advice can only be rendered after a discussion of your particular circumstances with an attorney competent in meetings law.

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