After weeks of hinting, today the CFPB issued Compliance Bulletin 2015-05 trumpeting louder than ever its concern over marketing services agreements (MSAs). While MSAs are not per se illegal, it is clear that the CFPB is suspicious about the legitimacy of the promotional services under such agreements. The CFPB’s statements in the Bulletin indicate that they believe MSAs are agreements for referrals. Moreover, when read together with Director Cordray’s statements in the PHH case, the Compliance Bulletin raises the question of whether the CFPB would ever find any arrangement with a referral source to be compliant. It certainly makes clear that it will be harder than ever to prove to the CFPB that you got it right each and every time – especially when the marketing efforts are fruitful.
While the Compliance Bulletin addresses MSAs, the CFPB raises concerns about “thwarting shopping” – citing an investigation of an affiliated business arrangement. Those deciding to stay in the MSA game (despite the warning in the Bulletin) had better make clear to consumers their ability to shop for advertised services. This supports our suggested best practice to use a disclosure similar to the model ABA Disclosure Statement in MSAs – even absent an ABA.
The CFPB also throws into the mix language from the regulatory exception for “normal promotional and educational activities” which disallows “defraying” expenses a referral source would otherwise incur. MSAs do not rest on this exception.
In light of the Bulletin, we are reconsidering whether any MSA could survive a CFPB challenge.
Please contact us with any questions.
Loretta Salzano
770-248-2881
Jenny Dozier
770-248-2885 ext. 241