AfBAs rely on consumer ignorance to make money! Get Educated!

Affiliated Business Arrangement (AfBA)– Even the term itself is misleading. It was previously called Controlled Business Arrangement, but even that name does not adequately describe the deceitful nature of AfBas which are sophisticated capture arrangements that exploit and abuse fiduciary relationships to steer business for profit. AfBAs are anti-competitive alliances that only work if they can successfully exercise control over consumer choice, an unethical strategy exposed by the AfBA’s favorite buzzword: CAPTURE-RATE. This kind of consumer steering is a breach and contradiction of a real estate agents’ fiduciary responsibilities to their clients.

These arrangements should be called Sophisticated Captured Audience Manipulation Schemes or SCAMS. They are illegal and cause dramatic negative effects to consumers and the marketplace.

"It is clear that AfBAs provide no direct benefit to consumers who remain completely unaware that their settlement business is being traded as part of a quid pro quo to compensate referral sources for steering their consumers to closely held title insurance agencies." - John Novarina, National Association of Independent Land Title Agents.

Consumer protections provided by the separation of independent and unbiased real estate service providers have been dismantled by the undue influence of participants connected by AfBAs. One Stop Shopping is a dangerous farce!

AfBAs lead to consumer price gouging and higher risk transactions for home buyers. AfBAs have made costly kick-backs more subtle and untraceable. You should never use a title company owned by you realtor!

The presence of AfBAs in a real estate market means that consumer must do more work, not less, to determine if they are paying too much for settlement services. Being asked to sign an AfBA disclosure should raise a red flag and prompt the consumer to ask questions and shop around. In a competitive market with no AfBAs, it is less likely that settlement prices will vary widely.

The presence of AfBAs in Utah will require more regulation by state agencies and could make Utah a target for federal oversight by the Consumer Financial Protection Bureau (CFPB). Higher regulatory costs are nearly always passed on to consumers.

Consumer Advocates in American Real Estate lists "Controlled Business Arrangements" (AfBAs) with Title and Closing Services as #2 on their list of the Top 10 WORST business practices.

Consumer watchdogs estimate that AfBAs cost consumers in Minnesota $63 Million in needless fees over a two-year period.

Even if the existence of an AfBA is disclosed to a consumer, it is not enough to protect the consumer from paying too much or to truly inform the consumer about how the AfBA could be adversely affecting the transaction. An AfBA WILL NOT save the consumer money.

Consumer Advocates in American Real estate lists Realtor breaches of duty and Antitrust violations related to consumer steering by AfBAs among the most important Lawsuits that Need to Happen. Don’t let Utah courts become a proving-ground for unnecessary and costly litigation.

Buyer Beware! In a transaction that involves an AfBA relationship consumers are at risk of having their interests ignored by service providers who just want to get the deal done and get paid!

The US Government Accountability Office found that AfBAs have become increasingly complex and difficult to regulate effectively. If AfBAs come to Utah, consumers may be required to fend for themselves with few resources or means of recourse if/when they are exploited by AfBAs.