Wed 23 Sep 2009
On transparency.
Posted by Michael A. Charles under Uncategorized
[5] Comments
A while back we abolished our last secret.
It wasn’t a spooky, life-or-death, Dan Brown-style secret. We discussed it openly around the office and with our friends. But we didn’t blog about it or talk about it in public.
The secret concerned what StepRep was. When we launched, we told everyone StepRep was a free reputation monitoring tool. And of course, it is a free reputation monitoring tool. But that’s only part of it.
The big secret was how we were going to make any money off our free reputation monitoring tool. People wondered, were we going to start charging a subscription fee? Would we make our users look at ads? Sorry, we said. Can’t tell you yet. It’s a secret.
That went on for months, and it sucked. We’re not naturally reticent people. But we had to keep it on the down-low while we built the product so that, instead of telling people what StepRep was all about, we could just show them. (Also, we were worried that someone would come along and steal our great idea.)
We’re not quite done building. But we’re far enough along that we no longer have to act all mysterious and vague. Now when people ask what StepRep is all about, we tell them to go try it for themselves. They quickly see that it’s not just a free reputation monitoring tool.
It’s a better way to advertise.
I’m glad we no longer have to hide this, because transparency is essential to what we’re trying to do. We want to be transparent about how we make our money, and we want to bring the benefits of transparency to the advertising business.
Whenever a StepRep user pays a reward to a customer, we take a ten percent transaction fee. That’s it. That’s our revenue model. Maybe someday in the future that percentage will change, but if it does, we’ll always be upfront about it.
We want every transaction in our system to be that transparent. Say you’re a realtor. Jenny’s selling her house. Her friend George suggests that she get in touch with you. When Jenny looks at your StepRep profile, she sees 1) how many people trust you, 2) how many of her friends trust you, and 3) how large a reward you’ll pay.
Jenny knows that she’ll be splitting the reward with George. She knows whether or not George’s advice can be relied on. When she looks at the list of her friends that trust you, she makes the same assessment for each of them – can I depend on this person’s judgement?
So Jenny hires you. You sell her house right away, because you’re awesome. You take your fee. You pay the reward to Jenny and George. We take our ten percent of the reward. No secrets, no surprises.
Isn’t it great when we’re all open with each other?


Ehhh…sounds great but you might have used another industry as an example. I’m pretty sure that’s a violation of some states real estate commission regulations. In some states an agent can lose their license for this type of fee transaction.
Lydia…thanks for raising that point. Don’t worry, we’ve done our research on this and we’re being extremely careful not to bend any rules.
I’m not acquainted with what the law says in all 50 states, but I’m going to forward your comment to somebody around here who knows a little more about the legal stuff. Watch this space.
gasp! JK… so let me get this transparency thing down- a reward is exactly… what?
What ever it is, I love this site for the reputation management, and I talk about it with anyone that is concerned about their employees ‘killing’ their brand et.
There’s so much misinformation out there that people don’t really know what is and is not. It’s refreshing to see people that know what they’re talking about. You have an Informed commentary seems to be a rare commodity these days. Keep it coming.
online reputation management – Reputation Management can help restore your online reputation.
Most referral-finder’s fees violate a Federal Law-RESPA.
Q 20. Can real estate licensee pay a referral fee or finder’s fee to an unlicensed person?
A No, if the resulting transaction falls under RESPA. Yes, if it doesn’t fall under RESPA. See Question 4 for a list of all those transactions that fall under RESPA.
A real estate agent may give someone a token of appreciation after receiving a referral (see Question 21). Furthermore, a real estate agent may give a commission rebate to his or her client (see Question 22).
For non-RESPA transactions such as the sale of commercial property, residential property with five or more units, agricultural property or vacant land—basically any property other than residential one-to-four unit property–or a transaction not involving a federally-related mortgage loan (e.g., private one-time lender or an all-cash deal), California law allows a real estate agent to pay a referral fee to an unlicensed person for merely introducing a new client. If, however, the unlicensed person goes beyond arranging an introduction, such as by negotiating the terms of sale on behalf of a principal, the real estate agent may not compensate the unlicensed person for performing licensed acts (Cal. Bus. & Prof. Code § 10138).
Q 21. Can a real estate licensee who receives a referral give the referring party a small token of appreciation?
A Yes. After a real estate licensee has already received a referral, he or she may give the referring party a small token of appreciation, such as a potted plant or movie tickets. However, this arrangement would violate RESPA if there was a prior agreement that the referring party would receive that gift in exchange for the referral. Also, any gift, no matter how small, may be covered under RESPA, but a small token of appreciation after a referral has already been received should pass scrutiny
Q 8. What is a “settlement service”under RESPA?
A A “settlement service” is defined as “any service provided in connection with a real estate settlement.” Settlement service providers include, but are not limited to, the following:
. Real estate agent or broker;
. Escrow agent;
. Title insurer;
. Lender;
. Credit reporting agency;
. Appraiser;
. Pest inspector;
. Property surveyor; and
. Attorney.
(12 U.S.C. § 2602(3).)
Hence, as a settlement service provider, a real estate agent is prohibited under RESPA from giving or accepting a referral fee incident to the real estate business, whether the other party to the referral arrangement is a settlement service provider or not. For example, under RESPA, a real estate agent cannot receive a referral fee for real estate service from a credit repair service, because the real estate agent is a settlement service provider. It does not matter whether the credit repair service is considered a settlement service provider or not.