Section 8 / Gifts Promo Activity – 1. Are gifts and promotions allowed under RESPA Section 8?

Compliance > Regulation X - RESPA
Q:   Are gifts and promotions allowed under RESPA Section 8?
 
A:   It depends.
 
Under RESPA Section 8(a), gifts and promotions generally are “things of value” and therefore could, depending on the circumstances, violate RESPA Section 8(a). If the gifts or promotion are given or accepted, as part of an agreement or understanding, for referral of business incident to or part of a real estate settlement service involving a federally related mortgage loan, they are prohibited.
 
For example, if a settlement service provider gives current or potential referral sources tickets to attend professional sporting events, trips, restaurant meals, or sponsorship of events (or the opportunity to win any of these items in a drawing or contest) in exchange for referrals as part of an agreement or understanding, such conduct violates RESPA Section 8(a). 12 CFR § 1024.14(b). Such an agreement or understanding need not be written or oral and can be established by a practice, pattern, or course of conduct. 12 CFR § 1024.14(e).
 
There is no exception to RESPA Section 8 solely based on the value of the gift or promotion. Accordingly, settlement service providers should carefully analyze whether providing gifts or opportunities to win prizes to referral sources could violate the prohibitions under RESPA Section 8.
 
However, in certain circumstances, gifts or promotions directed to a referral source are not prohibited if they are a “normal promotional or educational activity” meeting the conditions in Regulation X. 12 CFR § 1024.14(g)(1)(vi).
 
For more information about the analysis under RESPA Section 8(a), see RESPA Section 8(a) FAQ 1, above. For more information about “normal promotional and educational activities” under RESPA and Regulation X, see RESPA Section 8: Gifts and Promotional Activities FAQ 2 and FAQ 3, below.
 
 
This Q&A was based on information contained in the Consumer Financial Protection Bureau’s (CFPB) Real Estate Settlement Procedures Act FAQs that were issued in October, 2020, which may be updated from time to time.  This CFPB issuance may be found here:  https://www.consumerfinance.gov/policy-compliance/guidance/mortgage-resources/real-estate-settlement-procedures-act/real-estate-settlement-procedures-act-faqs/#respa-section-8-general
 

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