Modus, the closing services software company, allegedly violated state statutes over co-branding, social media advertising and mechanisms it used to lure clients.

Modus, a title and escrow service software company owned by Compass, is set to have its license revoked by state of Washington effective April 1 over a host of violations, including social media and co-branding violations, as well as the alleged products it used to lure clients away from other firms and the nontitle services it allegedly offered for free or below market value.

The move comes on the heels of complaints received by the state from two rival title firms.

“The Insurance Commissioner opened an investigation upon receipt of complaints from two Washington title companies,” the document reads. “Both companies allege that the licensee is providing rebates and inducements through a technology platform operating under the tradenames ‘Modus Technologies’ and ‘Modus.'”

Part of the complaint centers around “Staging Boost,” a platform offering in partnership with ZingFix, a third-party vendor that secures cleaning, landscaping, staging and listing preparation renovation with a deferred payment. The complaint states Modus used that partnership to lure customers away from other title companies.

Washington State law prohibits a title insurer or insurance agent from directly or indirectly “giving any fee, kickback, or other things of value to any person as an inducement, payment, or reward for placing business, referring business, or causing title insurance business to be given to either the title insurer, or title insurance agent, or both,” according to the state statute.

The complaint also alleged that, in six separate instances, Modus gave or offered to give non title-related services without charging or receiving a fee equal in value to the services provided — which is determined by market price — which violates state law.

The other accusations have to do with a social media advertising violation and co-branding violations.

Compass acquired Modus, a Seattle-based title and escrow software firm, in October 2020 for nearly $50 million, as part of its quest to build a platform for its real estate agents. The company moved further into title and escrow services in recent weeks with the acquisition of KVS Title.

The announced suspension of Modus’ license in Washington could potentially throw a wrench in the development of that platform for agents in Washington, where Compass has a large presence on the back of its 2018 acquisition of Avenue Properties. 

A spokesperson for Modus confirmed the company will appeal the decision.

“Modus is appealing the decision of the Office of the Insurance Commissioner and we look forward to working with them to quickly clarify any misconceptions around our business practices,” the spokesperson said in a statement. “Modus will remain operational throughout the appeal process while this matter is being resolved.”

Email Patrick Kearns

Compass
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