First American Title Co. will pay a $1 million fine for improper benefits given to California real estate agents.
The company, one of the “Big Four” title insurers, agreed to pay a $1.185 million penalty after California state regulators alleged that a marketing representative provided agents illegal perks such as video marketing and drone footage of listings with placement on social media sites, and bus caravans to promote listings.
The company also agreed to pay $185,000 to cover the department’s legal and investigative costs.
The marketing representative was identified as Eugene Bleecker, now a former First American employee, who was providing said benefits to his Los Angeles-based group Advisory Group Real Estate Network. The majority of the group’s 600 members were real estate agents who belonged to chapters in the Santa Clarita and San Fernando Valleys, officials said.
California prohibits title agents from providing perks to real estate agents as business inducements.
Presented by: Radian
In a statement sent to HousingWire, First American spokesperson Marcus Ginnaty said the company “fully cooperated” with an investigation by the California Department of Insurance (CDI).
“We’re pleased to resolve this matter with the California Department of Insurance, and remain committed to compliance with Department of Insurance requirements,” Ginnaty saId.
In its motion, the CDI stated that Bleecker’s Advisory Group started offering services in 2013. Since then, the Advisory Group network chapters met once or twice a month, and depending on the chapter, members paid $6 to $10 to attend each meeting. For $200, members could attend all meetings for every chapter.
As Bleecker would note in his recruitment pitches, there would be “significant benefits” for real estate agents who joined the Advisory Group, including hearing about listings before they appeared on multiple listing services, advertising assistance and participation in tour bus caravans.
In one email sent to chapter members dated Oct. 8, 2016, Bleecker mentioned parts of the upcoming meeting agenda, including “sharing with [chapter members] pocket listings before they hit the marketplace” and “having your listings placed on the next bus tour.” Members would also post liberally on the group’s Facebook page, extolling the “inside information” and “early tips” they received.
“First American encouraged Bleecker’s involvement with the Advisory Group despite internal guidelines for complying with anti-inducement laws, such as avoiding assisting others with marketing services or methods of growing their business,” CID officials wrote in a release.
California Insurance Commissioner Ricardo Lara said First American “looked the other way” while Bleecker marketed products in violation of state laws.
“First American Title Company failed to protect real estate consumers from conflicts of interest that can inflate the cost of title insurance,” Lara said. “This $1 million penalty should serve as a warning to companies that they are accountable for their employees’ actions that harm consumers.”
First American reported $2.3 billion in total revenue for the second quarter, a 41% increase year over year and up from $2 billion in the first quarter of 2021.
In June, First American agreed to a cease-and-desist order and paid a $487,616 penalty after the Securities and Exchange Commission announced a cybersecurity violation that exposed customer social security numbers and sensitive financial information. The SEC said First American “failed to act” following the violation, and found First American’s senior executives to be uninformed of the the vulnerability yet had failed to remediate it in accordance with the company’s policies.
The post First American fined $1 million for illegal perks to agents appeared first on HousingWire.