The Modified VOW Policy – What You Should Know

By
Thomas N. Jacobson
The Law Offices of Thomas N. Jacobson
and
John Rees
Callister Nebeker & McCullough
October 26, 2008

Modified Virtual Office Website Policy (VOW) will soon become part of a mandatory program that must be adopted and implemented by multiple listing services, brokers, and individual agents as part of the judgment entered into between the United States Department of Justice (DOJ) and the National Association of REALTORS® (NAR).  This paper will cover some of the significant items related to the new VOW policy and its implementation.

History:

On October 5, 2005, DOJ filed its First Amended Complaint against NAR. In that complaint DOJ alleged that the opt out provisions of the then NAR policies, referral provisions and other provisions contained in the NAR policies imposed greater burdens on virtual office brokers than traditional brick and mortar brokers. DOJ alleged these practices violated Section 1 of the Sherman Anti-Trust Act, 15 USC § 1, in that the policy restrained competition and suppressed technological innovation. DOJ sought a judgment restraining NAR from implementing the opt out provisions, adopting any anti-referral policy and restraining NAR from imposing any rule that places a condition on participation based on the broker’s business model.

After considerable discovery and pre-trial litigation, the parties entered into settlement discussions and on June 25, 2008 submitted a proposed settlement in the form of a judgment (a process we sometimes refer to as a consent decree). Included in the judgment were restrictions upon the types of policies NAR could adopt relating to MLS services, and Exhibit “A” to the judgment is the VOW policy that must be adopted by NAR and its member MLSs.

Scope Of The New VOW Policy:

For purposes of the VOW policy the term Virtual Office Website refers to a Participant’s Internet website through which Participant is capable of providing real estate brokerage services with consumers with whom the Participant has first established a broker consumer relationship. A Participant may designate an Affiliated VOW partner (AVP) to operate the VOW on behalf of Participant. A non-principal broker or sales agent (referred to in MLS language as a “subscriber”) may, with the Participant’s approval, operate a VOW site or have one operated for them by an AVP.

The right to display listings in response to consumer searches is limited to MLS content provided by the MLS in which the Participant has participatory rights. In the case of an MLS that belongs to a data and content sharing arrangement with other MLSs this includes all listing content the Participant can access through their participatory MLS and may include content from other MLSs.

VOW sites may include other features, information or services in addition to VOWs. This may include advertising or even an IDX feed. The displaying of MLS content on a Participant’s website does not require the prior approval of the listing broker. Except as discussed below, the listing broker submitting listings to MLS may not opt out the listing from display on a competitor’s VOW site.

Policies Applicable To Participant’s VOWs

There are two types of relationships contemplated by the VOW policy. The first is the traditional consumer-broker relationship. In order to satisfy the requirements for this relationship the broker must comply with all applicable state laws. This includes establishing an agency relationship and making all required disclosures.

The second type of relationship is a Registrant-Broker relationship. This is a relationship unique to VOWs and requires that certain steps be followed to create this relationship:

• Registrant must provide his or her name.
• Registrant must provide a valid email address.
• The Participant must send an email to the Registrant at the address provided by the Registrant confirming the Registrant has consented to the Terms of Use.
• Registrant must supply a user name and password, the combination of which must be different from all other Registrants.
• An email address may only be associated with one Registrant.
• The access must expire on a date certain, but may be renewed.
• The Participant must maintain records of all of the Registrant’s authorized access to the site, including their name, email address, user name and password. Such records must be kept for not less than 180 days after the expiration of the Registrant’s password.
• Participant must provide MLS with the name, email address, user name, password and audit trail if the MLS suspects there has been a security compromise.

The Terms of Use agreed to by the registrant must contain at least the following provisions:

• Registrant acknowledges entering into a lawful consumer-broker relationship with Participant.
• All data and MLS content obtained from the VOW are intended only for the Registrant’s personal, non-commercial use.
• Registrant has a bona fide interest in the purchase, sale or lease of real property being offered through the VOW.
• Registrant will not copy, redistribute or retransmit any of the data, content or information.
• Registrant acknowledges MLS ownership of and the validity of the MLS copyright of the MLS data base and content.A mouse click is sufficient to acknowledge agreement to the Terms of Use; however, nothing in the Terms of Use may impose a financial obligation on the Registrant. In order to impose a financial obligation on the Registrant, a separate agreement is required and cannot be agreed to solely by a mouse click. A VOW must prominently display an email address, telephone number or other means to communicate with Participant to ask questions or obtain more information about the properties displayed. The Participant must be able to respond knowledgably to any inquires made by registrants concerning properties displayed on the VOW.

The Terms of Use agreed to by the registrant must contain at least the following provisions:

A Participant must comply with the following requirements:

• VOWs may not display listings of sellers that have affirmatively directed their brokers to withhold their listings or property addresses from display on the Internet. The listing broker has the responsibility to communicate with the MLS that the seller has decided not to allow publication of the listing or address on the Internet. (Participants may provide to consumers via other delivery means, such as email, facsimile or otherwise, the listings of sellers who have directed not to have their listing or addresses published on the Internet.)
• A seller that has directed the listing broker not to allow the publication of the listing information or address on the Internet shall execute a written instruction in the form to be provided with the policy.
• If the VOW allows third parties to write comments or reviews about particular listings, display hyperlinks to such comments or displays an automated estimate of the market value of the listing, the VOW shall disable or discontinue such features at the request of the seller. This does not prevent the Participant from communicating their professional judgment about any feature that has been disabled.
• A VOW must maintain a means to receive comments about the accuracy of any data or information beyond that supplied by the MLS. VOW operators must remove any false information or data upon demand from a listing broker as to information or data relating to their listing. This does not apply to opinion provided in good faith by the Participant.
• The MLS data must be refreshed no less than once every three days.
• The MLS database and content may not be made available to any third party, except as specifically authorized in the VOW policy.
• Every Participant must display a privacy policy explaining to Registrants how the information from them will be used.
• Listings may be excluded only on the basis of objective criteria such as geography, list price, type of property and cooperative compensation offered (though exception should be taken to this on the basis of the fiduciary obligation to parties).

Participants intending to operate a VOW are under an obligation to notify the MLS of their intent to operate a VOW.

Policies Applicable To Multiple Listing Services

Subject to existing state laws, an MLS is obligated to allow its Participants to operate a VOW. The MLS must provide to the Participant basic downloading of all non-confidential MLS data and content. Confidential data is only those items Participants are precluded from providing to their clients. MLSs are not compelled to establish public access sites. MLSs may pass on the cost of providing the download but must charge the same price as they would charge to non-VOW users of the same information. MLSs may require adequate security protection, such as firewalls, but cannot impose greater requirements than they would on non-VOW users. The MLS may impose certain rules to maintain an audit trail. The MLS may not regulate or prohibit the display of advertising on VOW sites, except to prohibit deceptive or misleading advertising. The MLS may not prohibit a Participant from enhancing their VOW with information obtained from other sources. The MLS may not restrict the format of VOW except to assure compliance with the Code of Ethics.

An MLS must make the listing data available to an AVP in the same manner as it is made directly to Participants. AVPs do not have independent participation rights and MLSs may require agreements with AVPs concerning the security and safeguarding of the data and content. In most cases it is appropriate to use a license agreement containing confidentiality clauses and other protection for the MLS data and content. The security rules for an AVP cannot be more stringent than those imposed on a Participant. The AVP can download listing information and content in the same manner as a Participant. An AVP cannot be conditioned access on financial terms different from the Participant. These items can be reflected in a license agreement and the AVP cannot be suspended or denied access for any reasons other than those applicable to a Participant. An AVP must be given notice of and the same opportunity to correct afforded Participants under the MLS Rules and Regulations. Once the AVP is no longer designated by the Participant access can be denied.

An MLS may not prohibit, restrict or impede a Participant from referring Registrants to any person or from obtaining a fee for such referral.

Requirements MLSs May Impose On Operation Of VOWs

There is certain information a Participant’s VOW site may not make available for search or display by Registrants, unless such information is made available by bricks and mortar brokers:

• Expired, withdrawn or pending listings.
• Sold data unless the actual sales price is accessible from public records.
• The compensation offered to other MLS participants.
• The type of listing.
• The seller’s or occupant’s name, phone number or email address.
• Instructions or remarks intended for cooperating brokers.

The content may not be changed from what is provided by the MLS. It may be augmented with additional data or information not otherwise prohibited from display as long as the source is clearly identified.

A notice must be contained with the data stating the data is deemed reliable but not guaranteed accurate by the MLS. The Participant’s VOW may include other disclaimers necessary to protect the Participant.

The listing firm and agent must be identified by name and be in a readily visible color. It must be predominantly displayed and must be in a typeface not smaller than the median typeface used in the display of listing data.

The number of current listings a Registrant may view shall not be less than 100 or 5% of the total listings, whichever is less.

MLSs may also impose requirements on requiring the displaying of sources of non-MLS provided data and information. The MLS may establish a period no shorter than 90 days during which Registrants password are valid.