FTC Ends Code of Ethics Probe

April 1, 1997

The Federal Trade Commission has dropped an eight-year investigation of the NATIONAL ASSOCIATION OF REALTORS®' Code of Ethics. In a recent letter, FTC Director William J. Baer said, "Upon further review of this matter, it now appears that no further action is warranted by the Commission at this time."

The action "lifted a cloud that had been hanging over us," according to NAR General Counsel Laurene K. Janik.

The investigation, which started in 1989, looked at three issues:

  1. Whether Article 16 (formerly Article 21) prohibiting REALTORS® from soliciting the clients of other REALTORS® was too broad
  2. Whether the prohibition in Article 15 (formerly Article 23) against the public disparagement of a REALTOR® by another REALTOR® could be construed to include statements adverse to another REALTOR® but nevertheless true
  3. Whether former Article 6, now part of the Code's preamble, was too restrictive

Since 1995 the FTC has issued subpoenas to four local associations of REALTORS® in connection with the investigation. The FTC was looking for information about ethics hearings in which buyer's brokers' advertising practices were alleged to have violated the Code of Ethics.

After the investigation started, NAR changed the wording of Article 15 in an effort to clarify it and shifted former Article 6 to the preamble, which is not enforceable. NAR stood firm against making any substantive changes to Article 16, Janik says.

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