The holidays are upon us and that means it’s the gift-giving season. If you are considering passing out some presents to your colleagues, remember to stay RESPA compliant. The last way you want to spend the New Year is under a Consumer Financial Protection Bureau (CFPB) investigation.
RESPA Section 8 prohibits giving or receiving a “thing of value” in exchange for the referral of settlement service business. However, RESPA defines “thing of value” as “any payment, advance, funds, loan, service or other consideration.” A holiday gift could be included in that definition, particularly if it’s given in exchange for a referral of business.
This does not mean, however, that gifts are entirely prohibited. RESPA News, sister publication to The Legal Description, spoke with Howard Lax, member, Bodman PLC, about gift giving and the accompanying RESPA issues. Lax says that it can be advantageous to use Regulation X’s marketing exception.
“Do not be afraid to give holiday gifts, but stay within the guideline that is laid out in Regulation X,” Lax said.
Lax went in-depth on a few points in this RESPA News article. Here are just a couple of the ideas Lax presented.
- A holiday card announcing a charitable donation in lieu of holiday gifts (or cards sent from the charity stating that a donation was made in the referral source’s name by the recipient of the referrals. Do not ask referral sources what charity they want the donation to go to (an opportunity for the referral source to direct the donation would be a “thing of value”).
- An advertisement in an association trade journal or website, or sponsorship of an association educational event, thanking the members for their business during the prior year, and stating that you are looking forward to working with the members in the coming year.
Be sure to check out RESPA News for the full story