June 1st - 2011

Advertising in real estate: Beware of pitfalls and know the rules

Advertising can be a powerful tool to attract potential clients, whether it’s through flyers, newspaper ads, billboards or blogs.

Advertising can be a powerful tool to attract potential clients, whether it’s through flyers, newspaper ads, billboards or blogs.

However, real estate professionals need to be careful that their ads comply with the many advertising rules designed to protect consumers.

Real estate advertising rules are covered under the Competition Act, the Real Estate and Business Brokers Act, 2002 (REBBA 2002), the REBBA Code of Ethics, the RECO Advertising Guidelines, the REALTOR® Code of Ethics, the Personal Information Protection and Electronic Documents Act (PIPEDA) and Do Not Call legislation. These sources also cover laws dealing with trademarks, copyright, slander and libel.

Given the volume of regulations, REALTORS® need to take care that all advertising and promotion produced by them or on their behalf is not false, misleading or deceptive. Claims cannot be ambiguous, inaccurate or incomplete, according to RECO’s advertising guideline 4.1, which also stresses that comparative business claims must explicitly identify details (area, time, source etc.) or not be used.

For instance, an ad describing a real estate professional as “Your Number One Specialist” is an example of a false or misleading claim. The wording must specify whether that number refers to an individual sales representative, a group, or combined performance, and whether the statistics refer to sales volume, units sold or number of representatives, including the date or time period, and the source of the claim.

False or misleading claims are among the top five advertising infractions made by registrants, according to a winter 2011 RECO article. For instance, a registrant’s bench ad in 2004 promoted “Guelph’s Number One Specialist” but a RECO panel found that the ad lacked details to support that statement. (The full decision is dated 2004/10/30 and can be viewed at www.reco.on.ca.)

Even if an ad is literally true, it can still be considered misleading if it leaves a general impression deemed false or misleading. According to the Competition Act, misleading advertising occurs when a representation to the public is materially misleading.

If the representation could influence a consumer to buy the product or service advertised, the ad is deemed material. The literal meaning of an ad as well as the general impression it leaves are both considered when a ruling is made. Proof that the ad actually misleads someone is not required -- only that the ad is capable of misleading. The actual wording may be correct, but the general impression can still be false, perhaps as a result of the absence of essential information such as additional costs or conditions. These two sample ads from CREA’s Misleading Advertising Guide on www.realtorlink.ca demonstrate how ads can mislead:

“We’ll list your home on the board’s MLS® system for only $500!” However, this claim is untrue if a particular brokerage’s fee is actually $750 (a $500 general fee plus a $250 administrative fee.) This statement would likely induce a consumer to purchase the services, but may be false or misleading because a significant part of the fee is not disclosed.

“1% commission! Available services include: listing on the board’s MLS® System, open houses, newspaper advertising, signs and negotiating offers.” This example may create a false or misleading general impression if the fee doesn’t include all of the stated services and additional costs are involved.

When advertising house listings, REALTORS® should take extreme care to avoid false statements. Common infractions include misrepresentation of the square footage of a house or descriptions of features that do not exist.

Regardless of the type of media used -- print, broadcast, written, oral or electronic, including the internet -- the rules governing misleading advertising apply. The best way for a REALTOR® to avoid false or misleading advertising is to learn those rules. Details are available in two sections about advertising in OREApedia at www.orea.com, and plenty of other resources are available. Find the Misleading Advertising Guide on www.realtorlink.ca in the blue right-hand box under Compliance Centre. Also look on the Competition Bureau’s website www.competitionbureau.gc.ca in the left-hand box under By Topic: Ensuring Truth in Advertising. Lastly, you can check out RECO’s Advertising Guidelines available at www.reco.on.ca. Go in either through the MyWeb section and then click on “Advertising” in the left-hand box or by clicking on About RECO, then on REBBA 2002 in the bottom right-hand corner, then on REBBA 2002 Online Guide, and then on Advertising Guidelines.

The do’s and don’ts of false advertising

DO clearly disclose all information in the advertisement that could affect a consumer’s decision on whether to purchase the service (e.g., additional fees, conditions, restrictions). Such disclosure should be in the main body of the ad near the claim in easily readable form.

DO avoid fine print disclaimers. Make sure any disclaimer is large enough to be easily read by a consumer, close to the claim it relates to and that any important additional information or conditions/restrictions are clearly stated.

DON’T make representations to the public where the “general impression” could be seen as false or misleading (e.g. clearly disclose any additional information that could influence a purchasing decision, such as additional costs or conditions/restrictions).

DON’T make performance claims (e.g., sales performance) without having adequate data and a source to support the claim before making the claim.

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For more information contact

Ontario Real Estate Association

Jean-Adrien Delicano

Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246