WASHINGTON — The National Association of Realtors offered Realtor association and multiple listing service executives warnings on four important legal issues they should keep in mind Wednesday afternoon — and none of them were the one you might be thinking of.
The four issues were: website accessibility under the American with Disabilities Act (ADA), the California Consumer Privacy Act (CCPA), wire fraud and the Telephone Consumer Protection Act (TCPA) — some of which have been the subject of recent lawsuits. Not mentioned on Wednesday were a trio of bombshell sales commission lawsuits that accuse the 1.3 million-member trade group and real estate franchisors Realogy, HomeServices of America, RE/MAX and Keller Williams of violating the Sherman Antitrust Act.
In March, homeseller Christopher Moehrl filed a class-action antitrust lawsuit against NAR, alleging it and the franchisors illegally require “buyer broker compensation.” Two similar lawsuits were filed earlier this month, and, shortly thereafter, NAR distributed an FAQ to its 1,100 or so local Realtor associations encouraging agents and brokers to talk to clients about their compensation and denouncing the suit’s claims. On Wednesday, during a talk on hot-ticket legal issues, those lawsuits didn’t come up.
On Thursday morning, NAR Senior Counsel Finley Maxson briefly addressed the lawsuits at an MLS forum to say that the trade group would file a motion to dismiss the Moehrl suit, probably on Friday, saying that the suit mischaracterizes NAR rules and pointing out that Moehrl has not alleged an injury — that he couldn’t negotiate, for example.
Maxson did not offer MLSs any advice on what to do about the suits or seem worried about their outcome.
Here are the issues that did prompt concern at a session for MLS and association executives on Wednesday at the Realtors Legislative Meetings & Trade Expo (colloquially known as NAR Midyear):
1. ADA website accessibility: “The issue is still around and it’s increasing. The amount of litigation that we’re seeing filed in federal and district court has risen 177 percent from 2017 to 2018,” Lesley Muchow, NAR vice president and deputy general counsel, told hundreds of attendees.
She pointed to a court ruling in January in which the 9th Circuit Court of Appeals determined that Domino’s Pizza’s website was subject to the ADA, rejecting the company’s argument that the U.S. Department of Justice (DOJ) should first develop requirements for creating accessible websites before companies are held liable for ADA violations.
The court ruled that waiting for the DOJ to issue further guidance — which the agency has expressed no interest in doing — would be an undue burden for disabled individuals and deny them full and equal access, Muchow said.
The court noted that the DOJ, in consent decrees, has already required that businesses comply with Web Content Accessibility Guidelines (WCAG) and that the federal government itself had made its websites comply with WCAG standards, she added.
What this means for real estate businesses is that they can’t wait for the DOJ to issue clarifications on its accessibility requirements, Muchow told attendees.
Lesley Muchow
“This is an issue that businesses need to be paying attention to, understanding and addressing, ensuring that their websites are accessible,” she said.
It also means that real estate firms should do an audit of their websites if they aren’t sure about its accessibility, according to Muchow.
“Do an audit and see how your current website fares on the accessibility scale and then create a plan for addressing some of those accessibility issues,” she said.
She recounted how an NAR member had approached her in the conference expo hall that day and said that he had found out his website was not accessible and was easily able to find a new vendor to address that issue.
“MLSs with consumer-facing websites should pay particular attention to this issue,” Muchow said.
2. The California Consumer Privacy Act: The CCPA, which is designed to provide protection for individuals’ personal information, will take effect January 1, 2020. The legislation comes on the heels of the European Union’s General Data Protection Regulation (GDPR), a similar data privacy law, which went into effect in mid-2018.
The CCPA applies to for-profit businesses that are doing business in California, but may encompass businesses outside of the state that have contact with California residents, according to Muchow.
The CCPA applies to businesses with gross annual revenue of $25 million or more, that derive at least half of their annual revenue from the sale of consumer data, or that buy, sell or receive for commercial purpose the personal information of 50,000 or more consumers, households or devices. Personal information is basically anything that can be used to identify an individual, Muchow said.
Many large MLSs may fall under that 50,000-threshold, she noted.
“So MLSs will need to evaluate how much information they collect from California residents and whether or not, for example, they receive data from properties owned by California residents or the devices used by California residents to access [their] websites,” Muchow said.
For businesses that have to comply, at or prior to the collection of personal information, the business must disclose to consumers the category of data that will be collected, the purpose for which that data will be used and how and whether that information will be sold, she added.
Consumers will also have the right to request businesses identify if and how their information will be shared or disclosed and will have the right to request deletion of their information, according to Muchow.
“The right to deletion is not absolute because the law recognizes that in some instances businesses need to maintain information in certain circumstances,” she said.
For example, an MLS may need to retain subscribers’ data in order to continue to provide its services or a brokerage might be required by state law to keep data in connection with transactions, she added.
The CCPA contains an exemption for nonprofits, but if a nonprofit has control of and shares branding with a for-profit entity that’s required to comply with the CCPA, then compliance would be triggered for the nonprofit, according to Muchow. That may be a particular concern for Realtor associations, which are nonprofits, but often own their own MLS, which may be for-profit.
Muchow said she anticipates further guidance on the CCPA this summer before it goes into effect in January.
This is not likely to be the last piece of state legislation regarding data privacy.
“The conversation around data privacy is heating up and there have been a number of other bills proposed in different states similar to the CCPA,” Muchow said.
3. Wire fraud: Despite NAR’s efforts to educate its members about avoiding wire fraud, the crime is only increasing, according to Muchow.
“From 2015 to 2017, there was a 1,100 percent rise in the number of victims in the real estate industry and an almost 2,200 percent rise in reported monetary loss. The monetary loss in the real estate industry is reported by the FBI to be the largest,” she said.
All parties to a transaction are at risk, according to Muchow.
“Anyone from the attorneys, to the title companies, to the real estate agents. All parties need to protect themselves as well as the consumer in preventing these wire fraud scams from being perpetrated,” she said.
She pointed to a 2018 case in Kansas, Bain v. Platinum Realty, where the listing broker was found to be 85 percent liable for a buyer’s losses from a wire fraud scam in which a hacker had sent wiring instructions from the listing broker’s email.
That listing broker was ordered to pay a judgment of $167,129, according to Muchow.
“The biggest way to prevent this from happening is consumer awareness and education,” she said.
She advised that Realtors never send wire instructions by email and inform their clients that they won’t. Instead, agents should send the instructions over the phone or through a platform and let buyers know that they should verify the instructions by phone to make sure they’re correct before following them.
In instances where wire fraud happens, reporting it in the first 24 hours is crucial, according to Muchow. Consumers should first contact their financial institution and then call their local FBI office, she said.
Consumers can file a complaint with the FBI at IC3.gov.
If reported during the first 24 hours, “there is some chance the financial institution and the FBI will be able to work together and stop the wire and recover the funds,” Muchow said.
4. Telephone Consumer Protection Act (TCPA) and Do Not Call lawsuits: There’s a lot of “trolling” law firms that see violations of the TCPA as “low-hanging fruit,” particularly in regards to text messaging, according to Muchow.
“To reduce risks here, always make sure that you have written consent from the consumer before you ever text them,” she said.
“Avoid using autodialers for any communications if you don’t have the requisite consent.”
Also, scrub phone numbers in your contact database against the DNC registry, she added.
Editor’s note: This story has been updated to note that NAR Senior Counsel Finley Maxson mentioned the buyer commission lawsuits on Thursday morning.
