Knowing or Reckless False Statements About Competitors

REALTOR® A operated a residential brokerage firm in a highly competitive market area. He frequently used information from the MLS as the basis for comparative ads and to keep close track of his listing and sales activity as well as his competition. One day, while reviewing MLS data and comparing it to a competitor’s ad, REALTOR® A noticed that REALTOR® Z had used a diagram to demonstrate his market share, contrasting it with those of several other firms. The ad showed that REALTOR® A had listed 10% of the properties in the MLS over the past three months. REALTOR® A thought this was low. His analysis of MLS data showed his market share was 11%. REALTOR® A filed an ethics complaint against REALTOR® Z citing Article 15 of the Code of Ethics in that REALTOR® Z’s “obviously understated market share claim” was a “misleading statement about competitors.” REALTOR® A’s complaint was considered by the Grievance Committee which determined that an ethics hearing should be held.

At the hearing, REALTOR® Z testified he had always been truthful in his advertising and that all claims were based in fact. He produced an affidavit from the Board’s MLS administrator which indicated that a programming error had resulted in miscalculations and, after careful recomputation, REALTOR® A’s market share over the past three months had been 10.9%. The administrator’s statement noted that this was the first time that information related to REALTOR® A’s listings or sales had been misstated on the system. “I relied on information from the MLS. It’s always been accurate and I had no reason to even suspect it was wrong last month,” said REALTOR® Z in his defense.

 

The Hearing Panel agreed with REALTOR® Z’s logic, noting that a REALTOR® should be able to rely on generally accurate information from reliable sources. They reasoned that if, on the other hand, the MLS had shown REALTOR® A having, for example, 1% of the market, then REALTOR® Z’s reliance on the information would have been “reckless” because REALTOR® A had generally had a 10–15% market share and a reasonable conclusion would have been that the information from the MLS was seriously flawed. The Hearing Panel concluded that REALTOR® Z’s comparison with his competitors, while slightly inaccurate, was based on usually accurate and reliable information and had been made in good faith and while technically “misleading,” had not been “knowing” or “reckless”. REALTOR® Z was found not to have violated Article 15.