Holiday Gifts
Question: I have taken a hard line on gifts related to the holiday season and am hoping you have some specific guidance to point to that will back me up. For example, if fruitcake given to Real Estate Brokers in the area says, seasons greetings from "name of bank", will that fit the marketing exception? Can you help me on this?
Answer: Fruitcake is ok, a case of Johnny Walker Black Label is not. Somewhere in-between is the line. RESPA does not provide any clear guidelines other than that gifts should not be in return for business referrals and that any gift should not be valuable enough to be compensation. Knowing that the area is grey, here are a few rules you can pass on. First, the gift should be of negligible cost and in no way related to the business relationships - especially not referrals.
Second, gifts should be given as a promotional as much as a thank-you. Giving gifts only to those who brought significant business fails the RESPA test because the gift giving is connected to referrals. So the fruitcake goes to all real estate brokers, not just the three who brought in the most business.
Third, if the same or similar gifts are given to other business relationships that have no connection to real estate settlements, the gifts to others helps to support the view that the gift is a gift and not conditioned upon settlement services or referrals.
Copyright © 2005 Compliance Action. Originally appeared in Compliance Action, Vol. 10, No. 2, 2/05
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