Idea: Get your customers to refer business

Alright, it's not a new idea, but it is one that has proven difficult for many in the mortgage space to implement effectively. Part of that is because most folks who get a mortgage aren't all that pleased by the time they reach the end of the convoluted process. Another reason is that RESPA and the new RESPA Police Force are just too scary for many lenders.

Faisal Qureshi is not afraid of RESPA. He recently founded Tell-A-Pal, a service he says simplifies referral marketing by making it easy for businesses and professionals to reward their existing customers for referring new customers. Users create a personalized web page that their customers and other contacts can use to send them referrals. When someone sends a successful referral, the business rewards them. Tell-A-Pal makes its fee through a transaction charge for every referral that it receives through the system.

I asked Qureshi how federal legislation would impact his business. This is what he said:
Yes, we know about the RESPA regulations quite well. Specifically, section 8 which pertains to the anti-kickback provision. Unfortuantely, the RESPA rules are not entirely clear in all situations. We have contacted the RESPA folks to try clear up the confusion and hopefully get a clear answer. Like many things, there is a lot of gray area around what's permissible and what's not and it really boils down to interpretation. Some mortgage brokers don't see an issue with it (since there's nothing in RESPA that clearly says you can't give a "thank you" reward for a new client to an existing client). Others might think differently since RESPA doesn't clearly say it is permissible. It really boils down to interpretation. However, we should keep in mind that many (if not most) brokers thank existing clients for referring new clients today (albeit not through a formal program). And in the context of Tell-A-Pal a “referral” is really a “lead”. Also, the RESPA regulations
were put into place to prevent "settlement agents" like title companies, from striking backdoor deal with agents at the expense of the customer.

Having said all that, we at Tell-A-Pal offer our service to anyone in any industry or market. If there are areas where there are regulations around the payment of referral fees (medical profession is another example), it's up to the people in those areas to make sure they comply with them. It would be hard for us to focus on building a product that created value if we had to indemnify all Tell-A-Pal users from legal issues pertinent to their profession. I hope that answers your question.

Whether you believe formalized systems, like that offered by Tell-A-Pal, are safe for your business or not, having some kind of system for capitalizing on the relationships you've already made is important. Since Tell-A-Pal doesn't tell its users what kind of reward they must offer their existing customers, but rather simply provides the technology to effectively request and track the referrals, it could be a solution worth looking into.


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