Title company agrees to pay $50,000 following illegal inducement allegations
News: 2021 Press Release
ORANGE, Calif. — First American Title Company has agreed to pay the California Department of Insurance $50,000 to resolve allegations that one of its employees violated state law that protects consumers from conflicts of interest in real estate transactions.
An investigation by the Department revealed that Steven Patrick Thomas, a representative employed by First American Title Company in Santa Ana, owned a separate business with a direct connection to the real estate industry. Using the name “Reports on Housing,” Thomas allegedly provided housing market information not related to title insurance to real estate agents.
Under the anti-inducement provisions of the California Insurance Code, a title insurance representative cannot own, be employed by, or otherwise be affiliated with a business or entity that provides real estate services to anyone considered a property owner or real estate agent.
An unlawful inducement occurs when a lender or real estate agent receives free or discounted services, property, or money in exchange for steering business to a title company. Such rebates act to inflate title insurance premium rates for all consumers. Thomas’ alleged violation is considered an inducement and is prohibited under the California Insurance Code.
The agreement included a $25,000 penalty to resolve the enforcement action and $25,000 for recovery of the Department’s investigative costs.
In a separate agreement with the Department, Thomas will not market title insurance in California.
Media notes:
- Stipulation and Waiver – First American Title Company
- Stipulation and Waiver – Steven Patrick Thomas
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Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.
