Posted by Charles_Ca on 3/20/07 12:01pm
Msg #180843

Acknowledgement gifts and RESPA, one opinion

I ran across this as one persons opinion regarding the giving of acknowledgement gifts under RESPA. This is just one opinion and I would recommend asking your own attorney regarding any programs for gift-giving you may be contemplating. I have the rest of the opinion if anyone is interested but I don't see how it wold apply in notary work. If you want it let me know and I'll e-mail it to you.

D. Acknowledgement Gifts

The third, and most difficult question, is whether it is permissible to acknowledge the receipt of referrals after the fact by giving the referral source an acknowledgement gift. The answer depends upon a number of factors.

As indicated, RESPA Section 8(a) prohibits an agreement or understanding that a “thing of value,” to use the language of the statute, will be provided in exchange for a referral. If there is no agreement or understanding that precedes a referral for the giving of a “thing of value” it would appear on its face that there is no RESPA violation. Simply giving an acknowledgement gift to a referral source as a token of appreciation without a prior agreement or understanding should be permissible.

The problem in this area, however, is avoiding the appearance that an implied agreement exists. For example, if it is your business practice to always give an acknowledgement gift after receiving a referral, this could create an inference that the referring party was aware of the business practice, and that the reason he/she gave the referral was to receive the acknowledgment gift. In this situation, a prohibited implied agreement would exist. Likewise, even if such a regular business practice did not exist, if the acknowledgment gift is substantial in value, that fact alone might create the appearance that an implied agreement actually existed which preceded the giving of the referral.

RESPA does not prohibit the giving of a personal note to thank the referring party for a referral. It does not prohibit nominal gifts that are part of a promotional activity. It does prohibit giving gifts or “things of value” pursuant to a prior express or implied agreement that if a referral is given, a gift or “thing of value” will be provided.

<<<To avoid the appearance that acknowledgement gifts are given pursuant to a prior prohibited express or implied agreement, our recommendation is that any acknowledgement gifts conform to the following guidelines:

1. Varied Response. Our clients should have a varied response in acknowledging their appreciation for referrals. Sometimes the acknowledgement should be a thank-you note. Sometimes a pop-by should occur to express appreciation face-to-face. Sometimes an acknowledgement gift can be provided. It should be clear, however, that no standard business practice exists to reward each referral with a gift.

2. When acknowledgement gifts are given, they should be of nominal value and not defray the normal business expenses of the recipient. Flowers and movie tickets are probably appropriate. Expensive bottles of wine may not be appropriate. In addition, gifts that defray the normal business expenses of the recipient should always be avoided. Try to be creative in giving an acknowledgement gift as opposed to spending a lot of money.

3. No Advance Promise. Any acknowledgement gift should be given as a surprise token of appreciation. There can be no agreement or understanding that precedes the referral that the gift will be given.>>>