Risk reduction in a wired world

Caution, common sense, and a good Internet policy will help you stay out of trouble.

Cyberspace may not be as tangible as a newspaper or flier. That doesn’t mean you can let down your guard when it comes to risk reduction and the Internet. Not only do the same rules apply as for other media, but the technology associated with the Internet and e-mail poses some additional concerns.

During the TAR Winter Meeting, a risk-reduction panel consisting of Rob Hovious, a partner with Coldwell Banker/de Wetter Hovious in El Paso, Real Estate Support Systems Inc. State Director Ken Capelle, NAR Assistant General Counsel Michael Thiel, and TAR Director of Legal Affairs Ron Walker discussed risk-reduction for Web sites. Here is a summary of that discussion.

A policy manual is key

For brokers, an Internet policy manual can serve an important role in reducing risk. The manual should spell out procedures for developing and maintaining Web sites, using e-mail, privacy issues, and other technology-related areas of concern. The TAR legal staff is currently reviewing a template that Texas REALTORS® may use to develop an Internet policy manual. The template was drafted by real estate practitioners and should be available to Texas REALTORS® by July 2001.

Some brokers may think that because their agents are independent contractors, they need not worry about what’s on each agent’s individual Web site or how they use e-mail. But independent-contractor status generally applies for tax purposes, not for purposes of agents’ conduct. The Real Estate License Act also places a duty on brokers to supervise and be responsible for the conduct of their sales licensees. That means that both agents and brokers can be liable for agents’ actions. Brokers who have never looked closely at their agents’ individual Web sites might want to do so.

Brokers might want to provide agents with template pages or Web sites in order to ensure consistency and compliance with their Internet policy. If agents are allowed to develop and maintain their own sites, brokers should consider reviewing and approving the initial site and any changes before they are posted to the Internet.

Furthermore, such issues might be appropriate for the independent contractor agreement. This might reduce risk and help clarify the roles of the parties.

Liability lurks in many places

One of the greatest risks in the real estate business comes from misrepresentation. In fact, 58% of all loss errors and omissions claims in Texas stem from misrepresentation. The Internet is no safe haven from this risk. Many times, a mistake about a property is a simple, unintended error. It makes good sense to verify property information.

Fair-housing complaints also may stem from information posted on a Web site or included in an e-mail. Be sure that comments about who an agent might serve or prospective property purchasers do not discriminate against a protected class (race, color, religion, sex, disability, familial status, and national origin).

Any comments about competitors, their business practices, and their listings should be posted with great caution. Keep in mind that competitors are usually the largest source of persons who will complain about a broker’s or agent’s advertisements. Any advertisement published by a real estate licensee must not only be truthful, but it must not create a misleading impression. Libel and antitrust laws might give you enough reason to include in your policy manual a prohibition against comments concerning specific competitors.

Computers and the Internet have played prominently in some sexual harassment cases. Examples of problems include storing offensive material on office computers, posting it on a Web site, or sending it by e-mail. Any e-mail policy should prohibit the sending of any e-mail (jokes or otherwise) that any reasonable person would find offensive. This is especially important for e-mail that is provided by or for the office. Any offensive e-mail that one might inadvertently receive should be immediately deleted, and the sender should be notified not to send such e-mail in the future.

The technology associated with the Internet makes unauthorized use of copyrighted materials easier than ever. Just because an image or text is on the Internet and can be downloaded or copied and pasted with a few clicks does not make the practice legal. Agents should be certain they have the right to publish the materials they include on their Web sites. Again, brokers may have vicarious liability for instances of copyright infringement on their salesperson licensees.

Privacy and security are important

A Web site without adequate security invites trouble. You might want to hire a computer consultant to review your Web site’s (and your agents’ sites’) security, even if it was designed by a Web-design firm you trust. You should also find out the following about the firm that designs and maintains your site:

• Are they insured?
• Do they protect the site from unauthorized data? If so, how?
• Do they protect the data (client names, addresses, etc.) from unauthorized access? If so, how?

Your Internet service provider should not allow others to post information to your Web site without your knowledge and consent. For Web sites that are designed to receive information–especially personal information–from viewers, proper security procedures and data-protection policies should be in place.

Consumers are very concerned about privacy on the Internet. Not only must you protect your clients’ and customers’ privacy, you must tell them how you do so. A privacy policy should include notice whether information is being collected, an opportunity for users to opt out, the ability for users to correct information, and security.

Privacy is also important to keep in mind for agents who might receive personal information via e-mail from clients. The privacy manual should address e-mail with private or confidential information.

Keeping control of and updating information

Outdated information, pages, and links are commonplace on the Internet. You should periodically review all Web sites (company and agent sites) to check for errors and needed changes. The broker must consider how any follow-up is to be addressed if the obligation to renew the Web sites is placed on the individual agents.

Finally, make sure that when listing information is changed in the MLS, you are notified so you can make the appropriate change to your Web site, or the change is made automatically on your Web site.

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