Poaching Clients and Customers

The issues

To what extent does a customer or client belong to a previous seller or provider of services?
Is it permissible to advertise special discounts or free services in order to entice the clients or customers of others?
Is it permissible to take advantage of meetings, conferences, parties and similar opportunities in order to poach a customer or a client?
What does Jewish law say about "cold calling"? Should it be allowed? Is there a difference between a targeted mail-shot and an open mail-shot and, if there is, should targeted mail shots be more acceptable or less so than general ones?

The Jewish Perspective

Competition is healthy and beneficial. The Sages saw the benefit to society from competition in encouraging lower prices and better services. It is understood that benefits to society and to consumers in general outweigh benefits to the individual or to smaller groups. Accordingly, undercutting one's competitors in offering goods and services is not a problem at all. Even so, everyone has a responsibility not to undermine the income of his neighbour. Following in the principle of "what is repugnant to you, don't do to others," one may not create cut-throat competition in a situation that can not sustain the other traders. Unless the newcomer is offering a better or cheaper service, he has no right to undermine the livelihood of his friend.

Another involved in poaching is deceit. It is prohibited to distort the truth in order to convince a client to move from one business to another or to use bribery in order to encourage a purchasing agent from one source rather than another.

If a person's actions cause customers to come to him and he has thereby created a market, he has the right to benefit from that market. For example, if somebody were to open up an electronic goods superstore that provided services and items at a very low price and attracted clientele into his locality in order to shop there, it would be considered poaching for a competitor to open up an electronic goods superstore next door on the back of the publicity of the first trader.

While deliberate enticements to customers to change their loyalties are frowned upon, traders are under no obligation to refrain from such practices and customers are free to decide to change suppliers on their own accord.

How can a trader claim a customer as his own? Generally this is the case where that customer has purchased that trader's goods regularly (ie three successive times). Minhag hasochrim (the custom of that trade) would however negate any expectation on the part of a shopkeeper that a customer would return to him.

In general, a customer is free to choose any other provider of goods or services, should he so decide, and the new provider cannot be forced by the current provider to refuse to supply a customer. What remains prohibited is the making of misleading statements or of statements that are flattering, not founded on reality and which do not represent the provider's true thoughts.