The Consumer Financial Protection Bureau (CFPB) has ordered New Jersey-based Stonebridge Title Services Inc. to pay $30,000 in civil fines after investigators uncovered that the company was paying illegal kickbacks for referrals.
The bureau alleges that Stonebridge paid commissions to more than 20 independent salespeople who referred title insurance business to the company.
Stonebridge solicited people to provide it with referrals of title insurance business, offering to pay commissions of up to 40% of the title insurance premiums it received.
These practices violated Section 8 of the Real Estate Settlement Procedures Act, which prohibits kickbacks and payment of unearned fees in the context of residential real estate transactions, the CFPB says in a press release.
Paying commissions for referrals is allowed under RESPA if the recipient of the payment is an employee of the company that is paying the referral. In this case, although the individuals received W-2 tax forms, the bureau's investigation determined that these individuals were independent contractors and not bona fide employees.
The case was referred to the CFPB by the Department of Housing and Urban Development.
To read the full complaint, click here.