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.