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Marketing Service Agreements (M.S.As)

Marketing Service Agreements (MSAs), if done correctly, do not fall into the Section 8 prohibitions.

These are formal contractual relationships which can be very complicated. Unlike a Co-marketing relationship, one party pays a monthly fee to the other party for marketing services.

Here are some suggestions to stay compliant.

Should do or include the following:

  • Give or receive payments based only upon the reasonable, fair market value of services performed.
  • Obtain an independent third party to determine the fair market value of the services.
  • Ensure that the services provided are:
    • actual, necessary and distinct from what the salespersons normally would do in the course of their job.
    • Primarily “public facing” advertising”.
    • Enter into a written agreement.
    • Documents the services to be performed and the fees to be paid for the services.
    • No agreement or understanding regarding referrals.
    • Avoid “exclusive” and “preferred” language.
    • Do not pay for “direct sales pitches” to particular prospective borrowers.
    • Avoid paying for “access”.
  • Ensure that the services set forth in the agreement are performed:
    • Use an independent 3rd party auditing service.
    • Review on a consistent basis.
    • Based upon data collection and through regular reporting requirements that trigger the payment of fees.
    • Adjust the payment of fees based upon actual services performed.
  • Provide a written disclosure to consumers advising them of the MSA relationship.
  • Conduct periodic review of each MSA.
  • Maintain copies of all reports and valuation.

Should not do or include the following:

  • Do not give or receive payments that exceed the reasonable, fair market value of services performed.
  • Do not base the amount of marketing fees on the volume of expected or actual volume or quality of business.
  • Do not pay for direct sales pitches to particular customers.
  • Do not enter into exclusive MSAs in which the partner agrees to perform marketing or advertising services for only one company.
  • Do not enter into an MSA in which the company is named as the "preferred", "select" or "primary".
  • Do not base periodic adjustments of fees based on results.