CFPB RESPA Enforcement Action Targets Marketing Services Agreements

CFPB RESPA

On September 30, the CFPB announced a consent order with a Michigan-based title insurance company to address allegations that the company’s marketing services agreements (MSAs) with several real estate brokers violated the Real Estate Settlement Procedures Act’s (RESPA) prohibition against kickbacks in connection with real estate settlement services. According to the CFPB, the MSAs provided that the company would pay the real estate brokers for performing marketing services promoting the company. Specifically, although the MSAs provided for payment to the brokers based on the marketing services provided to the company, according to the CFPB the brokers were actually paid, in part, based on the number of referrals to the company they generated. Also, the CFPB asserted that the company entered the MSAs “as a quid pro quo for the referral of business.” In addition, the CFPB alleged that brokers that had entered into a MSA with the company referred a “statistically significant” higher amount of business than brokers who had not entered into a MSA. According to the terms of the consent order, the company must pay a $200,000 civil monetary penalty, immediately terminate any existing MSAs, and not enter into any MSAsthe future, providing a very broad and novel definition of MSAs that includes agreements with any person in a position to refer business providing for endorsements, joint advertising, access to counterparty and its employees, or marketing of the company’s services to others. However, the company may still purchase consumer-oriented advertising from companies that do not offer settlement services such as newspapers or television or radio stations, provided that the publisher does not endorse the company as part of the advertisement.