Hot Topics in Broker Risk Reduction

Cybercrime and Wire Fraud

Cybercrime—particularly wire fraud—continues to be a top concern in the real estate industry. The U.S. Secret Service has informed NAR about a new cryptocurrency scam targeting real estate professionals, some of whom have lost a significant amount of money. In the scam, fraudsters pretend to be wealthy all-cash homebuyers and engage a real estate agent to develop a relationship. Through the course of the engagement, the fraudster lies about becoming rich through cryptocurrency and then invites the agent to check out a crypto investment website that looks legitimate with cryptocurrency that seems real. This is a variation of a “pig butchering” scam where the victim is “fattened up” before taking the bait. The real estate agent makes a small investment, sees a large return, and is allowed to withdraw their profit. The agent then invests more money—even their retirement savings—only to lose it all.

Other forms of cybercrime remain unabated. For 2024, the FBI Internet Crime Complaint Center (IC3) reported potential losses exceeding $16.6 billion, up 33 percent over 2023. The top scams facing consumers and business in the real estate industry are: 

Artificial Intelligence

Generative artificial Intelligence (AI) has become a game-changer for the real estate industry, offering a wide range of capabilities to improve efficiency and productivity. AI platforms can create listing descriptions, property searches, social media posts, marketing content, and more. However, understanding the risks of using AI is critical to avoid ethical issues and potential legal liability. AI platforms are not 100% accurate and its output may not comply with fair housing laws.  Real estate professionals must remember to comply with all applicable laws such as real estate licensing and advertising laws. Also, REALTORS® remain responsible under Articles 2 and 12 of NAR’s Code of Ethics to ensure their representations and communications are honest, truthful and avoid exaggerating, misrepresenting or concealing pertinent facts.

Independent Contractor Status

The Federal Trade Commission (FTC) issued a final rule prohibiting employers from enforcing noncompete agreements against workers. Under the rule, a worker includes independent contractors. The rule was scheduled to take effect September 4, 2024, but has not taken effect due to a preliminary injunction issued by the U.S. District Court for the Northern District of Texas prohibiting FTC enforcement of the rule nationwide. On March 7, 2025, the FTC stated in a court filing that it was reconsidering its defense of the rule on noncompete agreements. 

The ability to work as an independent contractor is recognized and protected under many statepdf and some federal laws. The risk of misclassification poses a challenge for brokerages, particularly with the proliferation of teams, where team leads may want to dictate how team members manage their tasks and time. While there is often an inherent conflict between common law independent contractor status and the traditional classification of real estate salespeople as independent contractors, some state statutes expressly address the unique status of real estate agents, permitting classification as independent contractors despite the required control and supervision the broker has over the licensees. For example, in 2022, New Jersey amended its real estate brokerage law to retroactively exclude real estate salespersons from the state wage law, which uses the “ABC test” to classify workers. In addition, a recent California appellate decision affirmed a salesperson’s ability to choose to be an independent contractor, citing a 3-part test found in the state business licensing code. 

However, litigation and new federal and state legislation continue to threaten workers’ ability to be classified as independent contractors, including many real estate professionals. On March 11, 2024, the U.S. Department of Labor (DOL) issued a new rulepdf updating the test for determining whether a worked is an employee or independent contractor under the Fair Labor Standards Act. (the “2024 Rule”). The 2024 Rule shifts the analysis of whether a worker is an employee or an independent contractor to a more complex “totality-of-the circumstances” standard. The 2024 Rule provides for six (6) factors to consider when assessing how a worker is classified under the FLSA. The rule could make it harder for workers to be classified as independent contractors, despite the DOL stating that the rule will not result in widespread changes to worker classification. On May 1, 2025, DOL issued a bulletinpdf declaring that DOL is reconsidering the 2024 Rule and will no longer apply the 2024 Rule’s analysis when determining employee versus independent contractor status in Fair Labor Standards Act investigations. The DOL will apply the pre-2024 Rule analysis in determining employment status.

TCPA & DNC: Texting and Calling

Plaintiff lawyers have created a lucrative business model filing class action lawsuits alleging real estate professionals have violated the Telephone Consumer Protection Act (TCPA) and Do Not Call (DNC) laws by sending text messages and placing phone calls without the recipient’s consent. Specifically, the TCPA requires prior express written consent before using an automatic telephone dialing system (ATDS) to place telemarketing calls or texts to wireless numbers.

The United States Supreme Courtpdf has narrowly defined the TCPA’s ATDS definition to require that the call technology not only store or dial numbers, but actually use a random or sequential number generator to place the calls. Thus, calls using random or sequential number generators still require prior express written consent, which involves a signed agreement clearly and conspicuously disclosing the text recipient’s permission to receive call and text messages from the sender. Now it is clear that calls generated individually - not using a random or sequential number generator - need not obtain prior consent at all, even if the device has the ability to store and dial call lists. Keep in mind that DNC laws should always be followed, which prohibits individuals from contacting phone numbers contained in the DNC registry.

In response to the U.S. Supreme Court’s decision, several states have enacted so-called “mini-TCPA” laws which change the ATDS definition and provide additional restrictions on telemarketing calls and texts. In some states, the requirement for express written consent has been expanded to include any calls made using an automated dialing device or artificial voice message, not just random or sequential numbers. States have also adopted additional restrictions on the times in which such calls can be made as well as specifying the content and timing of required disclosures during a telemarketing call. These mini-TCPA laws apply to calls made within and to consumers located within the applicable states and could provide the setting for the next wave of litigation on this issue as state courts tend to be more consumer-friendly.

On December 13, 2023, the FCC adopted new rules under TCPA, including: clarifying Do-Not-Call Registry restrictions apply to text messages as well as phone calls; requiring the seller of a product or service to obtain consent directly from the consumer, known as 1-to-1 consent, before using an ATDS or sending artificial voice messages; and stating artificial voice messages includes messages developed using generative AI. The 1-to-1 consent rule was set to take effect on January 27, 2025. However, on January 24, 2025, the FCC postponed the effective date of the 1-to-1 consent rule pending judicial review and will publish a new effective date in the Federal Register after the legal challenges have concluded, but no later than January 26, 2026. Also on January 24, 2025, the 11th Circuit issued an order eliminating the 1-to-1 consent rule entirely. The FCC has also postponed the effective date of a Second Text Blocking Report and Order which expressly extended Do-Not-Call Registry requirements and protections to text messages in addition to phone calls.