Last week, the Colorado Insurance Commissioner did directly what the Consumer Financial Protection Bureau (CFPB) has been doing indirectly for over two years: he outlawed marketing services agreements (MSAs). Very narrow opportunities for collaborative marketing remain; other states may follow suit.
MSAs are contracts among different entities—usually title companies and other settlement service providers—for advertising or marketing services. Last year, the CFPB cast doubt on the idea that any MSA arrangement could comply with the Real Estate Settlement Procedures Act (RESPA). The bureau also ramped up its enforcement against a few targeted entities. The net result was for many companies to abandon MSAs as too risky. Others tried to morph their agreements into contracts for advertising services.
As a result, it is an open question whether any MSAs remain in operation in Colorado. The new regulation does not define MSAs as anything other than a “marketing arrangement . . . between a title entity and settlement producer.” That leaves a lot of gray area about the boundaries of the prohibition. In turn, that is likely to create a chilling effect as to any sort of conceivable marketing collaboration, like with websites and other previously viable advertising venues.
The lone exception in the regulation allows the “[d]esigning, producing, printing, distributing or causing to be designed, produced, printed, or distributed, on behalf of any settlement producer, postcards, flyers, home information books, business cards, or any other product used to market to prospective clients” as long as the title company makes “a charge that is commensurate with the fair market value of the work performed and the material furnished” and makes “a good faith effort to collect payment in the amount of such charge.”
Also permitted under the regulation are office rental contracts (in very limited and controlled circumstances) and affiliated-business arrangements (ABAs).
So if you currently have a marketing collaboration agreement in Colorado, and you want to keep it, you should have a long, serious talk with your lawyer.