Validity of claims
Section (7)(a) of Rule E-8 reads, “No broker or brokerage firm will use a professional designation in advertising unless the broker or brokerage firm is in good standing and the designation is easily verifiable by the public and the Commission. A broker or brokerage firm that advertises an award, membership or achievement must be able to provide verification of the validity of such claims.” For a practical example; if a licensee identifies themselves as a “Realtor” with the “Realtor” logo, it could be a violation if they were not actually a member of such an association. Likewise, if a broker advertises that they are the “Top Sales Producer in the Denver Metro Area”, they would be required to cite which organization awarded that designation or statistical data that supports that claim.
Representation of Sales
Similarly, Section (7)(d) of Rule E-8 reads, “General advertising which recaps sales activity over a period of time in a given subdivision or geographical area must: (i) Cite the source of the data; (ii)Include a disclaimer that all reported sales were not necessarily listed or sold by the broker; and (iii)intended only to show trends in the area or shall separately identify the broker’s own sales activity.” If a licensee sent a postcard to all the residents of a neighborhood identifying recent sales in a subdivision, but included sales in which the licensee did not participate, they would be required to include the disclosure language above. Failure to do so could be deemed a violation and result in discipline.
Further 12-61-113(1)(a), C.R.S includes language that prohibits a licensee from “knowingly making any misrepresentation or knowingly making use of any false or misleading advertising”. So, if a licensee advertises that they have a list or database of hundreds of buyers available to purchase a homeowner’s property, it would be expected that the licensee could provide such a list, if requested by the Division. Otherwise, the licensee may be deemed in violation of the above statute and face corresponding discipline.
Prohibiting deceptive practices
All of the regulations related to advertising are designed to prohibit deceptive practices on the part of the licensee or to reduce confusion and misunderstanding on the part of the consumer. Honesty, transparency, and clarity should always be the goal of the licensee. If an associate broker has any questions about the compliance of their advertising, they should discuss the matter with their employing broker. A brokerage’s office policies should provide guidance to employed brokers regarding advertising requirements of the brokerage. Commission Rule E-30 requires all employing brokers to “Take reasonable steps to ensure that violations of statutes, rules, and office policies do not occur or reoccur.” If an associate broker is found to be non-compliant with advertising regulations, the Division may look to the employing broker to see what systems and guidance were in place to prevent such a violation. If the employing broker is determined to be deficient in their responsibilities, they could also face discipline.