Auditor General finds hundreds cheated on real estate license exams

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A report from Ontario’s Auditor General has revealed the scale of cheating in Ontario’s real estate licensing program was much larger than was previously acknowledged.

The new details were reported in a value-for-money audit published on Nov. 30, about the Real Estate Council of Ontario (RECO) the arm’s length regulatory body that oversees the real estate profession in the province. It found that “large-scale, deliberate and organized misconduct” in 2021 accounted for 315 individuals caught cheating the Humber College Real Estate Education Program, a figure six times greater than has previously been admitted.

Elements of the incident first came to light in November, 2021, when 34 recently registered realtors had their licenses revoked for “failure to complete the designated educational courses required.” In December, another 20 licenses were voided by RECO for the same issue. Some of those who lost their license had already been trading real estate, handling down payments and other critical roles in the largest transactions most consumers make in their lifetimes.

What neither RECO or Humber College admitted at the time was those 54 voided registrants were just the tip of the iceberg.

“Most of the 315 learners were caught and sanctioned by Humber before they had completed the salesperson program and were therefore not eligible to apply for RECO registration,” RECO registrar Joseph Richer said. “While it’s unfortunate that some learners who cheated did become registered, it’s important to note that Humber, working with the exam-proctoring vendor, was able to identify the breaches and to deal with them so that these cheaters are no longer registered.”

The cheaters seemed to exploit elements of Humber’s online examination protocols, leading to a number of changes in the so-called “digital proctoring” process.

“One addition is the requirement for learners to have a second camera to provide a secondary view of the exam environment,” said Andrew Leopold, director of marketing and communications with Humber College in a statement provided to The Globe. “An exam cannot be accessed by the learner until they have completed a series of security checks, including identity verification, room scans to assure the exam environment is appropriate and secure, as well as acknowledgement of the rules of the exam.”

In 2021, Humber and RECO were reluctant to share the method by which the cheating was happening, but the AG spells out what appears to be technical limitations in the software used for the online-only examinations: “The proctoring software used could not detect and notify the exam proctor of screen sharing with other devices. The software also did not have continuous and automated proctoring detection, which means that the exam would continue and would not be paused even if the proctor was not able to monitor an exam writer due to a technical issue,” said the report.

Humber used and uses the same proctoring software as every other college and university in Ontario and now also offers in-person testing centres for test-takers so they can take exams in a controlled environment. That said, real estate exams are also made available remotely on a daily basis to test takers: “There are approximately 1,400 exams [taken] across the province per week. Every exam is monitored. Since March, 2022, we have caught individuals attempting to circumvent virtual exam procedures. We have not had any other instances of an organized attempt of a large-scale misconduct involving a group of learners,” Mr. Leopold said.

Mr. Richer asserted that Humber is catching “most cheaters before they are eligible for RECO registration.”

However, the AG’s report concludes the situation may still not be resolved: “RECO has not taken steps to independently verify whether the issues that led to the breaches have been satisfactorily addressed,” the report reads.

The rest of the Auditor General’s report offers other warnings on RECO’s capacity to police realtors in the province. Despite regulating a professional body with close to 100,000 members, there are only six investigators at RECO and of the 675 investigations of alleged misconduct completed over the past five years (there were 11,700 misconduct complaints by the public and other registrants in the same period.) Only 18 per cent of those investigations ended with a prosecution; 10 per cent resulted in a warning letter and the remainder resulted in some other form or enforcement action or sanction.

The AG also criticized RECO’s fines for misconduct typically fall well short of the commission earned in the course of an infraction. A notable example the AG presented was a seller’s agent who “misrepresented the listing” by claiming appliances were included, when in fact the furnace and air conditioner were rentals requiring the buyer to pony up an extra $8,900 to buy out the heating and cooling equipment. The fine for this deception was $3,250, but the commission on the sale was $14,100, leaving the agent with a profit of $10,850. In its response to the AG, RECO made no promises that it would revise this practice.

Perhaps the most startling revelation was the AG found there are more than 1,700 current realtors that disclosed a criminal charge or conviction on their registration applications (about 2 per cent of the approximately 98,000 salespersons in the province). The report alleges RECO has no formalized method to assess whether these charges or complaints should result in license revocation. The AG looked at examples of recent registrants with assault and assault with a weapon charges, as well as one person convicted of large-scale credit-card fraud and another convicted for kiting cheques, or making use of non-existent funds.