It Could Cost Real Estate Agents Personally If Your Office Does Not Have a “Do Not Call Policy”

If you are a Realtor, Broker or Office Manager without a Do Not Call Policy that includes a tracking & audit system, consider this before you pick up the phone; that phone call may personally cost you up to $11,000 per call… or $11,000 per day. Without warning retroactive fines can add up to hundreds of thousands of dollars because they are assessed from calls made retroactively back to when the first “Complainant Call” was made (and they pull your phone records)… NO WARNING NOTICE NEEDS TO BE GIVEN! So if your office does not have a “Do Not Call Policy,” or you somehow feel this article does not apply to you, save yourself some money and read on because this information just might save your business!

In writing this Market Update I took the time while calling on real estate offices to quickly run a survey on their “DNC” policies. My conversations revealed some serious misunderstanding about the “DNC” Rules. None of the brokers, managers, agents or other lenders we spoke with considered themselves to be “telemarketers,” nor did they feel they were subject to DNC Guidelines. They were all wrong! Several of the major Realty Franchises had briefed their agents or had their agents briefed during a seminar about the DNC Restrictions but left agents feeling like the industry was in a semi-grey area and the rules were not being enforced… which is, wrong again.

In speaking with legal staff the consensus is that a few “Test Cases” will come up and the rules will be re-written to allow for clarifications allowing Realtors to make calls without restrictions excepting “Cold Calls.” Once again, that is a bad idea unless you have deep pockets to pay attorney’s fees because the test cases have all lost… and the fines have put almost all of the defendant businesses’ out of business. The following are types of calls everyone thought were “Safe” to make… AND THEY ARE WRONG!

Example 1: (Assuming you are a Realtor or lender) You are sitting at an “Open House,” and you ask someone touring the home to sign your visitor book, possibly using the motivation of a “drawing” for some prize or simply to register so you can call them back later… If you call them back to discuss listing or selling a house, or discuss your lending services, know that 3 possible violations to the DNC Rules become an issue at the point you place such call.

1A) IF YOU DO NOT have an express written DNC permission included on your registry form stating that they have given you “specific permission” to call, you must FIRST check the DNC List before you call, or you are in violation. You can not assume simply because they have left their phone number that you have permission to call them about business!

1B) IF YOU DO HAVE an express written DNC permission included on your registry form stating that they have given you permission to call, you must FIRST check your COMPANY DNC List before you call or you are also in violation… and if you do not have such a “real time” list, you are in violation once again!

1C) IF YOU DO NOT HAVE A DNC POLICY which includes all the corresponding audit trails and procedures in place… you are again in violation automatically! The DNC Rules are very clear as to these points. The good news is that Central City Mortgage has your solution!

Example 2: (Assuming you are a Realtor or lender) You are sitting at an “Open House” again, and you ask someone touring the home to sign your visitor book… They sign into your book (which should have a DNC statement), but in signing tell you almost jokingly “do not call,” but provide their phone number and e-mail address. The reality here is that you can call them if they win your drawing, but you absolutely may not discuss business… this is a DNC Trap! Red flags need to go up when you receive any request not to be called, because if you do not place that phone number onto your company’s Real Time DNC List… YOU ARE IN VIOLATION of the DNC Rules.

The good news is that Central City Mortgage has done the research and negotiated an affiliate arrangement with a top rated service provider, that solves your DNC problems for the best price you will find anywhere… we looked!

Example 3: (Assuming you are a Realtor or lender) You call a past client who purchased their home from you over 18 months ago because in your notes you wrote down they were looking to move in about 2 years after they finished med-school… If you call them without checking your DNC lists, YOU ARE IN VIOLATION of the DNC Rules. The fact is if you call them at any time without checking your company’s real time DNC list you are in violation of the DNC rules! The logic here is that at any time before you place that call they could have called your office and requested to be placed onto such list specifically barring anyone from your office from contacting them.

Example 4: Your lender, a friend, someone refers a client that is considering listing their home to you; Somehow you have the contact information, and you assume that you can call this potential client. IF this referral’s phone number is listed on one of the DNC lists and for any reason they are frustrated with realtors or lenders, or are simply having a bad day… whatever reason you are reported. If you did not check that number against your own company’s DNC Lists, and can prove you did so via a DNC audit trail, YOU ARE IN VIOLATION OF THE DNC RULES. Once again the DNC Rules are very specific on these points.

The good news is that Central City Mortgage has your solution, and it requires NO Setup Fees or Contracts!With any of the above scenarios you have just opened yourself, your broker, and your company to an $11,000 fine for that single phone call. Assume you call twice… double that fine to $22,000 dollars! Make several other calls each day, none of which file a complaint and you have just generated a fine that could close your business’s doors plus such fine can pass thru to your broker and employing office. Do a quick Google search about DNC fines and you will be shocked at the fines that have been, and are currently being assessed. FTC and FCC Fines Aside FTC and FCC fines aside; leave them out of the picture temporarily… Also understand that the individual customers (“Joe Public”) can also sue you, your broker, and your company themselves under DNC Rules and collect monies as victims of your DNC violations.

BE WARNED; You can be set up for fines and lawsuits by consumers just looking to victimize you so they can collect! The laws allow for an individual to collect a minimum of $500 if they can show you did not have a “Subscription Account Number” (SAN) or DNC policy, and they claim you called them. The burden of proof falls on you as the business person; If you do not have a personal or company “Subscription Account Number” (SAN) and DNC policy with an auditable trail you are automatically in violation, just the same as if you were caught driving a car without a driver’s license (but a driver’s license fine is much smaller!) Indeed, fines for simple burglary are less than the fines for DNC violations! More frustrating to Realtors is that assuming you make any outgoing calls and do not have a “Subscription Account Number” (SAN), you are automatically in violation even if you actually had permission to call… because you can not prove to the FTC/FCC that you followed their required guidelines. All of this rapidly becomes a circular argument you can not win by design, and the rules are written in such a manner to assure you lose. Please take this seriously, because the fines are serious and the Federal Communication Commission (FCC) is also!

Fines Coming To A Mortgage Broker or Realtor Office Near You Now that the big telemarketing companies are starting to comply, with many driven out of business by DNC fines, about 60% of the “Do Not Call” (DNC) citations being issued to smaller sized banking, mortgage, and real estate oriented companies. These highly regulated types of businesses are thought to have money, plus the fines pass thru to their “Independent Contractor Agents” personally, who are also thought to make lots of money. Factor in that bankruptcy does not release the penalties and fines, nor does employee status shield the violator from violations of the rules and you have a real bear trap of a violation potential! These fines are very real, and the government enjoys collecting from DNC Scofflaws… they can’t lose because they loudly proclaim that they are protecting consumer privacy while they collect lottery sized, door closing fines.

Background On DNC Rules The Do Not Call registry, which was established in December 2002 and took full effect in June 2003, includes joint enforcement by the Federal Trade Commission (FTC) and Federal Communications Commission (FCC). These laws that were designed to govern telemarketing practices are now (from how we see it) being misinterpreted to apply to any other forms of sales related phone calls including mortgage originators and Realtor calls. Consumer activists are working overtime to assure the DNC Rules are interpreted to regulate any company or individual utilizing the telephone for any form of business purposes (other than government and non-profit organizations)… even if that business does not make the kind of “Cold Call” phone contacts the DNC rules were originally designed to regulate. Ever broadening enforcement and fines are completely out of control!

Can A Real Estate Agent Be Personally Fined? Absolutely! YES, a real estate agent is an independent contractor and can be fined personally, as well as the company they work for. Plus a complaint investigation against one agent in an office could easily trigger an investigation and fines for all of the agents in that office. As a follow-up response, you can protect yourself from these potential fines even if your office has chosen not to taken the DNC Rules seriously. The good news is that Central City Mortgage has your solution, and it is quick and easy to protect you or your whole office! The majority of the offices and agents we spoke with have absolutely no DNC Policies in place because they either were not aware of the regulations, do not understand the laws, or mistakenly believe they do not apply to their offices because they think they don’t make “cold calls,” or do not think they will get caught.

Take your pick; All of these excuses are simply wrong! The “test cases” have already been thru the courts and all lost… the fines are a matter of record! The requirements are that any company making out bound calls must have their own proprietary “SAN”; update the State & Fed DNC lists every 30 days (and the company DNC list in real time), run each phone number they are calling against these DNC lists. Most importantly, businesses must maintain an auditable tracking system plus provide ongoing DNC training to all employees and distribute written compliance manuals to each member of their staff. The most misunderstood requirement is that each company is required to maintain an internal “Company DNC List.” Failure to have such system in place it is deemed automatically to be “Out Of Compliance,” and subject to fines. The complete burden of proof is on the call originating party, so an ongoing record keeping system is absolutely required. And once again, Central City Mortgage has your solution for less than 20% of what everyone else is charging!

“SAFE HARBOR” PROTECTION: Clearly these regulations were designed by consumer groups to be difficult to comply with, but there is protection from complaints in the form of “Safe Harbor Protections.” Companies who can demonstrate that they have complied “In Good Faith” with all provisions of the DNC regulations, can demonstrate due diligence and provide an auditable tracking system, fall into such “Safe Harbor” protection. Under “Safe Harbor” protection, The FTC and FCC will investigate all complaints received (as required by the DNC Regulations), but if the offending company can show that they have a DNC compliance system in place, and actually ran the complaining phone number before placing the call… even if the call was somehow “accidentally” misdialed, the fines will be waived and no penalties accessed under “Safe Harbor” guidelines. Qualifying for “Safe Harbor” Qualifying for “Safe Harbor” provisions pose some interesting interpretations for the real estate industry whose producing agents are all “Independent Contractors,” and as such seen as being in business for themselves. Clearly from prior fines already levied against other industries, the Realtors sponsoring franchises can be held liable.

The only question might be how far up the corporate chain liability travels? My research would seem to suggest that liability passes up the corporate franchise chain as far as any compensation passes. We will surely see some high profile test cases once the complaints start rolling in and fines are levied… once again, ignorance of the regulations is no defense for the violations of such guidelines. Compliance Is Probably The Most Prudent Advice: In researching this article I contacted several large RE Franchises to request how they were complying with the DNC regulations and was surprised by their responses. Several said that the “National Association of Realtors” (NAR) had advised them that Real Estate Offices were not considered to be required to comply with DNC regulations, and that they were protected from the regulations because they had informed all of their agents “not to make cold calls!” As such, these offices felt that they were in compliance. One major franchise said that “only the agents who actually place the calls need to comply… and they have been advised to avoid cold calls!

We also contacted one of the most respected RE Seminar providers who had previously written about the DNC regulations on their website; this conversation was enlightening because they personally had a fully compliant DNC system in place and used it themselves in their real estate offices, and readily admitted that they were concerned about DNC compliance issues, but felt the rules were being misapplied to real estate calls. They agreed with our position that it was going to take several “Test Cases” to be fought in court to overturn such enforcement… but did not want to be one of the test cases considering the fines and attorney fees involved in fighting such a test case. It was agreed that compliance was probably the most prudent advice! With Compliance In Mind: Small offices may be able to get away using a single number but in doing so may find their “record” are not properly maintained and thus fall short of “Safe Harbor” protection in the case of a complaint.

This may sound like a joke, but it is just the beginning. The experts we are working with in order to assure compliance indicate that these are the steps required to be taken in order to be fully compliant (and included in affiliate arrangement.)

1) You need to get your SAN (Subscription Account Number)
2) Enact a compliance policy
3) Have a Training program for yourself and any employees
4) Keep records of all inquiries
5) Keep records of past and current customers
6) Have an internal “Real-Time” DNC list
7) Use your personal SAN to check numbers, and be able to prove it.
8) Scrub all calling lists using the National, State and Company Do Not Call registries on the frequency required by federal law (Every 30 days minimum)

If you as a Realtor or Loan Officer work for a company that does not have a comprehensive DNC policy in place, they are basically leaving you out there on your own. When a complaint comes in they will claim you are an independent contractor, and you were told not to make "Cold Calls"! All of the office managers and brokers we spoke with made such claims! We also spoke with several of the larger RE Corporate Offices, Local Board of Realtors Offices and several of the established industry experts and found that they all (except for the local BORs) have their own SAN numbers in place.

Considering that the average real estate commission is about $11,000 (the fine for every violation) per call violation, perhaps a wait and see attitude will not be financially devastating to successful agents. Perhaps not… but if for any reason you are reported by a consumer, not only the company, but the person making the actual call can be held accountable. Assuming no fines, the civil penalties alone ($500 currently) are far more expensive than the minimal cost to be compliant and avoid such risks.

THE FINES: (Just a Small Eye-Opening Sample) We have posted here several of the companies that have received fines as an example, but have avoided naming any of the local lending companies receiving fines because we compete against many of them and feel a DNC fine does not necessarily equate negatively on their lending practices. Presently our research for this article has found several lenders in the Southern California area (Orange County) receiving some very large fines for very minimal infractions (1 to 8 calls).

The fines are all large enough to put the offending companies out of business.

1) $1,138,551 Judgment: The Federal Trade Commission (FTC) imposed a $1,138,551 judgment against Executive Financial Home Loan Corp and company officers Michael Nikravesh and Ron Fattal for violating (DNC) provisions of the Telemarketing Sales Rules.

2) $120 Million Judgment: The marketers of “Seasilver,” an alleged phony cure-all, have been ordered to pay almost $120 million for failing to comply with an earlier order requiring them to pay $3 million in consumer redress. To date, Seasilver, USA, Inc. and Americaloe, Inc., and their owners, Bela Berkes and Jason Berkes, have paid less than $1 million of the consumer redress they agreed to pay. Under the Court’s order, entered on June 20, 2006, the Seasilver marketers are now jointly and severally liable to pay the full amount of $119,237,000, plus interest. The FTC has secured liens on the defendants’ assets, including a nursery, an aloe farm, and equipment.

What Might A Complaint Against A Major Real Estate Franchise Look Like? It Fines The Company And The Major Agents! NOTE: The two largest distributors (Independent Contractor Agents) of Seasilver, who were also named in the FTC’s complaint, settled the charges against them and have made their separate court-ordered payments of $1 million and $500,000. One might assume that the Seasilver complaint would be similar from the fines levied, structure wise, as a complaint against a major real estate franchise.

3) $5.35 Million Judgment: The FTC settled do-not-call charges against satellite TV provider DirecTV with a $5.35 million fine, the largest civil penalty it has ever levied in a case enforcing any consumer protection law. The settlement against DirecTV also names affiliate companies Communication Concepts and American Communications and require the companies to pay civil penalties of $25,000 and $50,000 respectively and bars the companies and its principals from future violations of the TSR and DNC rules.

The orders contain judgments of $205,000 against Communications Concepts and $746,300 against American Communications, both which have been suspended based on those companies’ inability to pay. Mortgage Companies Fined (just a sample of the cases reviewed); Additionally, a lawsuit filed in Palm Beach County Circuit Court alleges that Majestic Mortgage LLC made at least eight telephone calls to Florida residents on the state’s “Do Not Call” list during the past four months. The legal action seeks an injunction prohibiting Majestic Mortgage from any future calls to residents on the “Do Not Call” list and fines of up to $10,000 for each violation involving the calls it made to prohibited telephone numbers.

The Federal Communications Commission (FCC) issued a forfeiture notice to Dynasty Mortgage, LLC in the amount of $770,000 for 70 phone calls made by Dynasty to 50 consumers who were listed on the Federal Do Not Call List. According to the notice, Dynasty obtained the leads from a lead broker, who claimed the leads were scrubbed prior to Dynasty’s purchase of the lead. The forfeiture notice also found that Dynasty failed to comply with the Federal Do Not Call laws by failing to adequately train employees, maintain written guidelines, maintain an internal company Do Not Call List, and failure to regularly download the Federal Do Not Call List and use the current list to scrub phone numbers before calling consumers themselves.

NOTE: A third party scrubbing service can be used if they maintain separate SAN accounts for each subscribing client and follow DNC regulations accordingly. How Long Before Big Real Estate Will Be Targeted? The question now has to be how long before big Real Estate will be targeted? Now that individual parties can file lawsuits for violations of the DNC rules and collect “damages” with the governments help it is only a matter of time before some attorney sets up a class action sting case. We have seen this happen in years past with the failure to post APR calculations next to monthly payments in RE advertisements. Because of the size of most Real Estate and Lending Companies the problem is only going to increase; the only question will be which office, and how many agents will be made an example of? The State is making lots of money with these fines, and the enforcement is applauded by consumer groups who are demanding even tighter controls on mail, e-mail and cell phone list violations.

THE SOLUTION: (Just One Of Many Possible Solutions) Small to mid-sized companies are at a tremendous disadvantage because they typically lack the staffing, technology or expendable funds to put the required procedures into place to assure compliance with regulations like the DNC regulations require. We understand this problem because Central City Mortgage falls into this category also. Real Estate and lending offices may find it difficult to regulate and monitor the activities of independent contractors accordingly, and the ones we have spoken with are under the false assumption that the DNC regulations do not apply to them as offices, because it is their independent agents make any offending calls.

Keep in mind that the federal government requires that any company that places out bound calls must secure a “Subscription Account Number” (SAN), and run each and every call against the DNC list before placing such call. They must maintain a auditable call tracking system, provide a demonstrable DNC training program for all employees, distribute a written compliance manual to each member of there staff, enact an internal real-time company DNC list, and maintain detailed records of inquiries, current customers, and former clients plus provide a written policy of such DNC policy to any customer requesting such. Central City Mortgage has arranged an affiliate program that will provide all of these services while providing an easy-to-use interface for managing and updating call lists for any of our requesting Real Estate Agents, Offices and affiliate lenders.

This software based services assures compliance at Federal, State and Company levels, checking the federal registry and appropriate state lists while providing an easily auditable record of all activities. Training, testing and policy manuals are also included and website accessible without any special software required. The cost is a flat $10 dollars per month for agents and small offices that require only 1 SAN, or $100 per month for larger offices with unlimited access and separate agent named “Subscription Account Numbers” under office affiliation. This is a huge savings from what everyone we have surveyed is currently paying, and requires NO long term contract, plus these prices wave the initial set up fees plus represent a huge savings over what anyone else is offering these services for. About The Service Provider: The actual service provider is one of the largest, longest established, best reviewed, time tested and proven service providers in the growing DNC industry. We have been requested not to disclose the service provider’s name in any news letter releases to protect their pricing structures with existing clients and selling affiliate providers. This request is made because the prices we are offering are absolutely not available to anyone calling in requesting services without Central City Mortgage’s large group affiliate agreement.

THIS IS A DEAL that we hope to be able to offer ongoing, but right now it is for a limited time only. With this service you will be able to access your own personal or your office DNC program from the convenience of any computer with internet access anywhere in the world, 24/7. This means you can access the same data bases from your office, home office or laptop computer… so there is no excuse not to be in compliance with program prices as low as $10 per month. There is a lot more to this program than what we have time or space to write here and we understand that our readers will most probably have numerous questions. We have most of the answers, or can get them for you. As per our agreement with our services provider, we can extend this sign up invitation to all of our real estate affiliate offices, their real estate agents and teams, independent agents may sign up without the office applying, plus any of our affiliate banking and lender friends… we will work with you to assure you will be included at these group savings prices (including some of our “competitor” friends or other lender agents you might want to refer). This is something as an industry we need to assure everyone knows about without before fines are levied.

NOTE: About Other Service Providers; If you take the time to do a “Google Search” on DNC Software providers you will discover days worth of reading, but not find a more complete or better qualified program than the one we have arranged our affiliate agreement with. Central City Mortgage is not trying to suggest that any program is necessarily better than another, and for legal reasons would suggest you perform your own research before making any decisions. If after doing that research, you like our "Affiliate Program"… we will happily see that your business is also protected. Please be advised that Central City Mortgage does not accept any responsibility for damages, fines, legal fees or other losses resultant of any decision to use, or not use, this affiliate company’s services, or any other services or program(s).

Feel free to contact Ed Wright (909) 938-3777 or Ron Grandorf (909) 356-0956 with any questions, requests for additional information or to sign up. All checks will be made out to the service provider directly and no monies will be collected by Central City for these services; we are simply passing a great deal along to our affiliates and friends in the RE industry. Prices are subject to change. We welcome newly affiliated Realtors and Offices to apply… we do not want to see anyone forced out of business because of these usurious fines. You will not find a better deal or a more comprehensive program available elsewhere.

LEGAL DISCLAIMER: This article is for information purposes only and is designed to bring attention to the DNC Regulations without providing the complete guidelines required for DNC Compliance. For additional information please read the full DNC Regulations and/or seek the advice of a qualified attorney.