The Consumer Financial Protection Bureau today issued guidance warning mortgage comparison-shopping digital platforms that they are violating federal law if they direct shoppers to lenders or other real estate settlement service providers who pay referral fees to the platform. The Real Estate Settlement Procedures Act prevents companies and individuals from steering shoppers to providers by using “pay-to-play tactics” rather than providing comprehensive and objective information, the agency said.
Illegal activities include presenting one or more lenders in a non-neutral way or biasing a platform’s internal formula to favor preferred providers, according to the CFPB. Also, if a platform operator receives a higher fee for including a provider compared to what it receives for including other providers, that can be evidence of an illegal referral fee arrangement absent other facts indicating that the payment is not for enhanced placement or another form of steering, it said. Under the agency’s official procedures, the advisory opinion will constitute an interpretive rule under the Administrative Procedure Act and become fully effective when published in the Federal Register.