What is TREC Advertising Compliance Program and Why Was it Initiated?
While compliance protects consumers, its enforcement mechanisms haven't always been too understanding allowing businesses to learn and improve. Yet, the Texas Real Estate Commission (TREC) has pioneered a new approach that might just change how we think about marketing compliance. In this article we’ll try to explain how exactly that happened.
Why Did TREC Initiate the Advertising Compliance Program?
Let’s start with some context: the Texas real estate market represents a significant economic force. In 2023, the state saw 327,921 home sales with a median price around $335,100. This massive market is served by over 140,000 members of Texas REALTORS® and a total of over 279,000 licensed real estate agents in the state.
In 2022, about 1% of TREC license holders were the subject of a complaint of any kind. Among these complaints, only about 5% related to advertising issues. Despite this relatively low rate of violations, dealing with these cases was consuming disproportionate regulatory resources.
The violations themselves were typically technical in nature – issues like missing broker names on signs or required disclosure links on websites – rather than substantive deception of consumers. In response, TREC launched the Advertising Compliance Program in 2023 with a fresh philosophy: "to promote compliance, not punishment".
This represents a total makeover of how regulatory bodies can think of enforcing compliance.
What Issues Did the Texas Real Estate Commission Address?
TREC identified several key problems with how the things were going previously:
First, minor infractions were being treated with the same process as more serious violations, creating unnecessary friction and administrative burden. Under the new program, if a complaint involves only advertising rule violations with no fraud alleged, it's handled administratively at TREC headquarters rather than being assigned to a field investigator.
Second, the timeline for resolution was inefficient. Investigations for small advertising infractions often took 3-4 months to resolve – a timeframe that didn't serve anyone well. To address this, TREC added a special checkbox on complaint forms to flag advertising-related grievances and route them into an expedited process.
Finally, the punishment wasn't necessarily producing better compliance outcomes. Education and correction might be a better way.
How Does the Program Affect Real Estate Professionals?
A very different element of the program is the introduction of a 14-day cure window. When an advertising law violation is identified, both the licensee and their broker are notified and given two weeks to correct the issue and provide proof of compliance.
If they fix the problem within that timeframe, the case is dismissed with no formal discipline. Only if the issue remains uncorrected (or the agent fails to respond) does TREC escalate to formal disciplinary measures.
Instead of an adversarial relationship, this model creates a collaborative framework that recognizes most professionals want to comply with the rules, even though they still may occasionally make mistakes or misunderstand requirements.
What are the Key Advertising Issues Targeted by the Program?
The program addresses several common advertising compliance issues:
- Misleading Team/Agent Titles: Advertising that suggests an agent is a broker or uses unapproved business names.
- Omission of Broker Name: Ads or signs without the sponsoring broker's name in a sufficiently visible format.
- Missing TREC Links: Failing to include the "Consumer Protection Notice" and "Information About Brokerage Services" on websites.
These requirements derive from 22 TAC §535.154-§535.155, which were updated in 2023 to clarify expectations for licensees.
What Rules Govern the TREC Advertising Compliance Program?
The program operates under three primary regulatory frameworks:
1. 22 TAC §535.155 – This requires broker identification, regulates team names, and prohibits deceptive ads.
2. Program-Specific Procedure (2023) – TREC staff re-route advertising complaints to an in-house review desk rather than field investigators.
3. Tex. Occ. Code §1101.652(b)(23) – This prohibits ads that create a "misleading impression."
Texas law provides clear boundaries for TREC's advertising regulations. The Texas Occupations Code §1101.156 limits TREC to adopting rules only to prohibit false, misleading, or deceptive advertising practices. In other words, TREC cannot make arbitrary advertising rules or restrict what media an agent uses unless necessary to prevent deception.
How Do Advertising Rules Impact License Holders?
For real estate professionals, these rules have several practical implications.
Both the agent and broker are held accountable for advertising compliance. Before the program, even a minor oversight could result in formal action against both parties. Now, such infractions can be corrected within 14 days with no fine or disciplinary record.
This represents a significant shift in regulatory philosophy. The aim has become compliance through education rather than punishment, which encourages a more proactive compliance mindset.
There's also a likely reduction in adversarial complaints used as competitive tactics. Previously, agents sometimes filed complaints against competitors over technical violations to cause trouble. With the new program, such complaints mainly result in a correction opportunity rather than punitive measures, effectively "defanging" the use of minor advertising complaints as a weapon.
What Requirements Must Be Met Under the New Regulation?
While the enforcement approach has changed, the underlying requirements remain consistent:
- Name Identification: All advertisements must clearly include the name of the license holder or team and the broker's name. The broker's name must be at least half the size of the largest contact information or team/agent name in the ad.
- Website Disclosures: On any business website or social media page, license holders must display the Consumer Protection Notice and Information About Brokerage Services (IABS) in a readily noticeable way.
- No Misleading Content: All advertising must comply with TRELA §1101.652(b)(23), which prohibits creating a misleading impression. This means a sales agent's advertisement cannot imply they are a broker or operate an independent brokerage.
- Honest Performance Claims: Agents can only advertise themselves as having sold properties they actually brokered. An agent may only claim they "sold" a particular house if they were the listing agent or buyer's agent in that transaction.
How May the Program Affect Real Estate Advertising?
The Advertising Compliance Program is already changing how real estate advertising works in Texas:
We're seeing faster corrections as agents quickly fix issues with yard signs, web pages, or social posts rather than risk formal action.
There's also a rise in proactive compliance with brokers focusing on clearer brand guidelines to minimize TREC interventions.
The effect is a more responsive and adaptive advertising ecosystem where corrections happen quickly and compliance becomes integrated into the marketing process rather than treated as a separate regulatory burden.
What Changes Can Be Expected in Advertising Practices?
We can expect a few changes. We will likely see more prominent broker branding with larger broker logos or names on agent/team marketing materials.
There will probably be less ambiguity in team names with "Group" or "Team" suffixes used properly and fewer references that might imply a separate company or brokerage.
The program may also encourage brokers to set up formal advertising compliance reviews. Some large brokerages are now conducting periodic audits of agent websites and ads as a preventative measure.
From the agent's perspective, the program might reduce the "chilling effect" that strict enforcement can have. Previously, agents might have been hesitant to try new advertising methods for fear of inadvertently violating a rule. Now, agents may feel more confident experimenting within legal boundaries.
How Does TREC Regulate and Enforce the Program?
TREC has created specific mechanisms to put new rules to work:
They've established a centralized review desk with dedicated staff to handle advertising-only complaints.
When they identify a violation, they issue an initial notice and correction demand – licensees receive official notice and must fix infractions within 14 days.
The Advertising Compliance Program doesn't create new rules; it enforces existing requirements more efficiently. When an advertising complaint comes in, TREC staff first verify if the ad violates one of the established rules. If so, they send a compliance notice to the licensee and their broker describing the specific violation and what needs to be fixed.
What Are the Enforcement Mechanisms?
If the initial compliance-focused approach doesn't work, TREC still has substantial enforcement tools:
- Administrative Penalties: Up to $5,000 per violation per day for unresolved issues.
- Suspension/Revocation: For severe or repeated deceptive advertising.
- Broker Oversight Citations: Brokers can be penalized for failing to supervise.
Each day an improper advertisement remains uncorrected can count as a separate violation, so penalties can accumulate quickly if issues aren't addressed.
In egregious cases involving dishonesty or unlicensed activity, TREC may suspend or revoke a license in addition to imposing fines. However, such severe outcomes typically involve multiple violations or non-cooperation and are rare compared to minor infractions that the Advertising Compliance Program is designed to address.
What Are the Consequences for Non-Compliance?
Failure to address advertising issues leads to escalating consequences:
If agents ignore correction notices, TREC reverts to formal disciplinary action including fines and potential license sanctions.
These actions become part of the public record, potentially affecting professional reputation and future business opportunities.
It's worth noting that licensees have due process rights – they can appeal TREC disciplinary orders through the state administrative hearing process and courts. However, because the advertising program emphasizes voluntary compliance with issues resolved before formal discipline is imposed, it may prevent many disputes from escalating to contested legal cases.
How Can Complaints Be Filed?
TREC has streamlined the complaint process for advertising issues:
1. Online Form: TREC's website has a dedicated "Complaint form" page with an advertising-specific checkbox.
2. Mail or Email: Complainants can submit supporting evidence like screenshots or photos.
3. Acknowledgment & Tracking: TREC provides a complaint ID for status updates.
The special checkbox for advertising complaints helps route these issues directly to the specialized desk that handles them under the expedited process, rather than sending them through the standard investigation pipeline.
Final thoughts
TREC's Advertising Compliance Program is a breath of fresh air in a world of harsh punitive measures for regulatory compliance enforcement. By giving license holders a brief grace period to fix advertising issues, TREC has created a more efficient system that maintains standards while reducing unnecessary penalties.
Focusing on correction and education rather than immediate punishment can create better outcomes for everyone involved – regulators, businesses, and consumers.
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