Of course, you have to come to your own conclusions on what you do and don’t want to recommend. I have absolutely no problem doing so and there are other referral programs I have chosen not to do because I don’t think they are a benefit.

Presumably, if there were two absolutely equal banks, with the exception that Bank A gave $25 only to new accounts while Bank B gave $25 to new accounts and $10 to the referrer, Bank B would be recommended more.

Now what if Bank A is a tiny bit “better” than Bank B. It’s likely that Bank B would still get more referrals. It’s easy to rationalize; Bank A is only a tiny bit better; no one’s likely to notice the difference.

Then the question becomes, how much “better” does Bank A have to be than Bank B to convince people to refer new members to Bank A, which offers no money for referrals rather than Bank B.

That’s the question that makes these referral bonuses all seem fishy to me. I would never propose that any individual is doing this, but in aggregate, clearly it happens.

ING is fairly well known due to the large amount of advertising they’ve done. If, however, you feel it’s necessary to expalin a bit more, I would go with the following:

Like regular banks that in the past gave out toasters or other small appliances to get people to open a new account, many online banks have adopted the same strategy. In order to get new customers, online banks sometimes will offer a small cash incentive for you to open an account with them to encourage you to open the account.

Putting it in those terms should help reduce the fears of people…

One question, though: despite it being completely legitimate, having a “sign up and get $25 free” link just sounds a little fishy. What’s the best way to package it so people won’t be afraid to sign up with ING?