What’s fair in the name of competition?

Can a simple math mistake be the basis of an ethics violation?

This case study from the National Association of REALTORS® Ethics and Arbitration Manual concerns Article 15 of the Code of Ethics, which states: "REALTORS® shall not knowingly or recklessly make false or misleading statements about competitors, their businesses, or their business practices. (Amended 1/92)"

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 that 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.

How do you think the hearing panel ruled?

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