The Internet provides many exciting new opportunities to the real estate industry, but with new opportunities also come new business risks. Effective management of these business risks requires each office to create a risk management policy which addresses the Internet. Risk management planning will vary because of the many different business models used by real estate practitioners. There is no single Internet risk management policy for the real estate business. However, there are some key points that will appear in almost any plan and this article focuses on the specific areas that a risk management policy should cover. You may also copy and modify this sample office Internet use policy provided by Realtor.org.

Topics Policy Should Address

Risk management policies for the Internet should draw from sources such as legal rules, ethical responsibilities, and company policies. Company policies should play a prominent role because licensees can embark upon advertising and other business activities on the Internet independent of their brokers while leaving the brokers liable for their conduct. A good risk management policy should control risk, as well as guide those involved in creating and maintaining sites.

Copyright laws are an area that every risk management policy should cover. While everyone would like to build a “content” rich site, it is important that the risk management policy make all involved in development of a site aware that the use of content owned by third parties (e.g., newspaper articles, magazine articles, research reports, photographs, music or video, etc.) without permission is not permitted. The policy should set forth the steps necessary to assure that no copyrighted works appear on the site unless permission for their use has been secured.

Reminders about topics which are not unique to the Internet, like fair housing advertising, should be addressed in an Internet policy to avoid inadvertent violations, due to the casual style of the Internet. The ability of search engines on the Internet to scan thousands of web sites each day for inappropriate words or phrases could lead to complaints about even careless errors.

The policy should also address the different marketing tactics used to increase web site traffic. Two common methods are use of a celebrity's image and a contest. Just as copyright permission is needed to use a third party’s content, permission may be needed to use a celebrity’s image. The use of contests to promote a site has many potential problems because it is so easy for such a contest to cross the line between a legal contest and an illegal raffle (gambling). A risk management policy should set forth rules that must be followed for any contest hosted by the site.

Company policies should establish what content must receive prior approval from the brokerage and what can be done without that review. One idea is to establish a key Internet contact for the office or firm who will handle all Internet issues and advise company members on whether what they are doing complies with the company policies.

The use of the Internet is usually associated with advertising and the same need for accuracy exists on the Internet as in other forms of advertising. In this regard, the ethical obligations of REALTORS® will overlap with their legal duties. An inaccurate representation on the Internet can have implications either as the basis for a misrepresentation lawsuit or as a failure to comply with the obligations of the REALTOR® Code of Ethics under, for example, Article 2 or Article 12. While it goes without saying that REALTORS® should avoid misrepresentations, the nature of the Internet creates new possibilities for inadvertent problems that need to be addressed in a company policy. For example, outdated property information which may have been accurate when posted may no longer be if allowed to grow stale on the site. A risk management policy will address the need to maintain the site and review its content on regular basis. Reviewing a site’s content also includes the related need to check hyperlinks maintained at the site.

The collection of information from consumers (via the website or email) is an area of growing regulation and thus another important area to cover in a risk management policy. If a company already has a “privacy policy” for its website, the risk management policy will likely reflect what is contained in that policy. If a company does not have a privacy policy, writing a risk management policy will provide an opportunity to evaluate the need for one. A broker should make clear in its policy whether the company’s position on privacy also applies to individual sites operated by licensees under the broker's supervision. One particular area of concern will be any collection of information from children, and so special care is essential anytime the age of a user is requested or content is targeted to children. Because of the penalties associated with not following these procedures, brokerages may want to prohibit collection of this type of information.

A risk management policy should address email usage. Not only do several states now regulate unsolicited commercial email (so-called "spam"), but so do many Internet service provider ("ISP") contracts. Depending on their terms, breach of these ISP contracts can sometimes have a major impact on the relationship of the parties, including immediate termination of service without notice. Therefore, the policy must take into consideration not just legal liabilities, but also contractual obligations.

Finally, the brokerage policies may need to address the use of the Internet from an employment perspective. For example, establishing limitations on the use of the company’s facilities to access inappropriate sites or for non-business purposes may be appropriate in some instances. Similarly, establishing standards regarding anti-virus procedures may help avoid one of the newer risks of Internet-dependent businesses. On a slightly different note, the broker may want to use the company policy to limit any privacy expectations of sales people and other employees in the broker’s office when using the company’s facilities to avoid conflicts over that issue.

Conclusion

This article has just skimmed the surface of potential issues that may be covered in an office risk management policy for the Internet. Some of these issues are new applications of old principles and others are completely new and arise because of the use of electronic communications. Brokers will need to take these issues into consideration and how the issues apply to their own business operation when creating a policy for Internet usage in their office.

To assist brokers undertaking this task the Risk Management committee of the National Association has created a unique guide to assist brokers in developing policies for their offices. Because no two brokerages are identical, there can not be a model, one-size-fits-all policy, but the use of this guide will assist the broker in creating a policy that will fit with his/her own business operation and will assist that broker in managing the risks of their business.

You may also copy and modify this sample office Internet use policy provided by Realtor.org.