Advertising in the Guise of News

Shortly after mailing his “Homeowners Neighborhood Newsletter” to local residents, several complaints were filed against REALTOR® B claiming that he had engaged in deceptive advertising in violation of Article 12’s “true picture” directive. These complaints were reviewed by the Grievance Committee which determined that a hearing should be held and that all of the related complaints would be consolidated in a single hearing. The appropriate notices were sent and the hearing was convened.

REALTOR® A, one of the complainants, introduced REALTOR® B’s “Homeowners Neighborhood Newsletter” into evidence pointing out that, on the first page, REALTOR® B had prominently shown pictures of, and addresses for, ten homes in an exclusive area of town labeling each as “Recently Sold.” REALTOR® A, the listing broker for several of these properties, stated that, in his opinion, the average reader would readily conclude that REALTOR® B, by advertising this way, was claiming to have listed and sold the properties and that his claims violated Article 12, as interpreted by Standard of Practice 12-7. In response, REALTOR® B indicated that Article 12 was limited in scope to “. . . advertising and representations to the public” and that his “Homeowners Neighborhood Newsletter” was not, in fact, advertising but rather a well-intentioned effort to make homeowners aware of current market values. “Sale prices in our county become a matter of public record once a deed of sale is recorded,” REALTOR® B argued, “and anyone who wants to find out about recent sales can get that information from the recorder’s office. All I am doing,” he continued, “is reporting news—and saving residents the time and effort of retrieving this information on their own. If someone appreciates my efforts and later buys or sells through me, so much the better, but that is not the reason for my newsletter.”

After hearing from the complainants and the respondent, and after reviewing the content of the newsletter, the Hearing Panel concluded that it did, in fact, violate Article 12 since, while the information regarding the properties themselves was accurate, its cumulative effect was to convey the impression that REALTOR® B had listed and/or sold the properties when he had not. The fact that he had been the cooperating broker in one of the transactions did not give him the right to claim, directly or indirectly, that he had “sold” any of the other properties because in no instance had he been the listing broker. The Hearing Panel did not accept REALTOR® B’s claim that his newsletter was exempt from scrutiny under Article 12 in that he was disseminating news and not engaging in advertising. They noted that the name, address and phone number of REALTOR® B’s firm appeared prominently in several places; that a considerable portion of the newsletter was devoted to services available from REALTOR® B’s firm and the advantages of doing business with REALTOR® B; and concluded that while the newsletter might, in fact, include an element of “news” a primary purpose of it was to advertise REALTOR® B and his firm and, consequently, that it was subject to scrutiny under Article 12.