WASHINGTON (6/16/14)--The Consumer Financial Protection Bureau has ordered New Jersey-based Stonebridge Title Services Inc. to pay a $30,000 civil penalty as a result of paying illegal kickbacks for referrals.
The CFPB charges that Stonebridge paid commission to more than 20 independent sales representatives who referred title insurance business to Stonebridge.
"Kickbacks drive up the costs of getting a mortgage and put law-abiding companies at a disadvantage," said CFPB Director Richard Cordray. "The consumer bureau will continue to take action against companies that seek to attract consumers through illegal schemes."
The CFPB found that beginning in 2008 and continuing until at least 2013 Stonebridge solicited people to provide it with referrals and offered to pay commissions of up to 40% of the title insurance premiums. These practices violated Section 8 of the Real Estate Settlement Procedures Act (RESPA), which prohibits kickbacks and payment of unearned fees in the context of residential real estate transactions.
Paying commissions for referrals is allowed under RESPA if the recipient of the payment is an employee of the company paying the referral. However, the CFPB investigation found the individuals in question were independent contractors.
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