Real Estate’s Real Risk — More so than the Economy
In case the real estate and mortgage industry comes looking, I left that extra billion I had laying around in my wallet on the dresser. I hope you don’t need it. Full disclosure, I don’t have an extra billion or all of the one in need yet, either.
The real estate industry is estimated to generate 150 million leads a year. In the mortgage industry, it is over 200 million. TCPA alone has been around since the early 90s. This is only the start of federal and state privacy regulations. There are decades of leads that have been generated with no thought towards compliance or consent.
Until 2019, almost no lead generated in the real estate industry was done so compliantly. We safely estimate that of over a billion leads and inquiries, less than 1% offered passable consent and disclosure. This represents a risk for these industries that may surpass $50B in fines and suits — though actual penalties can be far lower than stated potential fines.
Cheap and easy leads mean a $20 lead could yield a $1500 fine — per occurrence under the old rules. In theory, this means every single call or text is technically an occurrence in cases of a flagrant violation. From Twilio:
Without explicit customer consent, companies must adhere to strict solicitation rules, solicitors must honor the National Do Not Call Registry, and subscribers may sue a company that does not follow the TCPA guidelines.
Consumer consent is an essential defense under the TCPA and should be a primary focus of any business that communicates with consumers and customers directly via telephony.
With the implementation of the TRACED Act that went into effect in July, the fines can represent a $10,000 penalty per call and stretch back four years in terms of the statute of limitations. This act is specific to robocalls yet easily could encompass every form of autodialer and predictive dialer viewed as a nuisance. This new law also removes the requirement for an entity to have received a citation prior to being fined, sued, or subject to forfeiture.
The biggest problem for real estate and the mortgage industry is consent and the ability to prove it. According to the Contact Compliance Center, TCPA lawsuits are the second most common form of litigation filed in federal courts. Notable recent cases and judgments include:
- Dish Network — $280M
- Caribbean Cruise Lines — $76M
- Capital One — $75M
- HSBC — $40M
In the cases of those organizations, they were contacting individuals that had, in fact, completed lead forms or were even current customers. In the case of the real estate and mortgage industry, the high dollar value of a new client and the prevalence of massive lead generation efforts meant an explosion of lead generation in the past decade. At many firms, a single individual could be called or texted more than 25 times.
One firm processed over a million leads in a single month and could send well over two million phone calls and text messages in a month. It would be worth every firm’s time, especially in a heavily regulated industry on the cusp of an economic change, to consider: how many non-compliant leads did I generate, buy, sell, call, or text — and how many times.
When managing a portfolio of nearly 800 lead generators and brokerages producing upwards of 10 million leads annually, in our initial review of TCPA compliance, we found not a single firm offered proper opt-in and consent. Add to this the common practice of cold calling in the brokerage side of the real estate industry and you have a ticking time bomb.
Enacting the right strategies now is the best thing possible, yet history cannot be undone. This is a risk with teeth and legs — costly and will follow the industry for a long time. We predict a slew of lawsuits in the near future.