Latest / PropMedia Podcast / Transparency in the AI Era: How AB 723 Impacts Property Media w/ Assemblymember Gail Pellerin

Transcript

Transparency in the AI Era: How AB 723 Impacts Property Media w/ Assemblymember Gail Pellerin · PropMedia Podcast

• 0:00
  SPEAKER_03: Hey, I'm Maddie, and this is Moses.
• 0:01
  SPEAKER_03: And we are the co-founders of propmedia.com and pixelmob.com.
• 0:06
  SPEAKER_03: This is the Prop Media Podcast, where we talk about everything around property media.
• 0:10
  SPEAKER_02: Today we're excited to talk with Assemblywoman Gail Pellerin about the bill that she authored last year, AB723, which is specifically about necessities.
• 0:21
  SPEAKER_02: It's a landmark bill in California, first of its kind in the United States, specifically legislating that digital changes to photos have to be disclosed in real estate specific contexts.
• 0:31
  SPEAKER_02: And it's becoming a pretty significant deal, particularly with the advent, the explosion of AI tools and the ease of manipulating photos, where consumer protection becomes very important in terms of what is the house actually like and the necessities of those kinds of disclosures.
• 0:49
  SPEAKER_02: So, since this, if you do anything with creating media in real estate, this is going to be impacting you and your business if you're in California right now.
• 0:57
  SPEAKER_02: And if not, the rest of the world, it's going to be coming.
• 1:00
  SPEAKER_02: So tune in and let's figure out how to future-proof your business.
• 1:29
  SPEAKER_02: In particular, maybe we could start with I mean, bills always come from somewhere, right?
• 1:34
  SPEAKER_02: We don't just design legislation for fun.
• 1:36
  SPEAKER_02: So, like what were the triggers or the constituent concerns, or like what led you down this path that you invested time and resources into designing this particular legislation?
• 1:47
  SPEAKER_00: No, well, you're absolutely right.
• 1:48
  SPEAKER_00: Uh, legislation comes from a variety of different sources.
• 1:51
  SPEAKER_00: It could come from groups or organizations, it could come from local governments, um, it could come from constituents.
• 1:58
  SPEAKER_00: And in this case, we had uh my chief of staff was um my uh was relocating, and uh her husband and uh her family had a farm in the Central Valley, and their three kids were moving down to the Central Valley.
• 2:13
  SPEAKER_00: So she was in Sacramento and she saw this um ad for a beautiful home, and she put her three kids in the car and she drove down to the Central Valley.
• 2:23
  SPEAKER_00: And the photos of that home had a glorious kitchen with an island and marble countertops and high-end appliances.
• 2:33
  SPEAKER_00: And she walks into this house and it is a shell with a couple of, you know, industrial type shelving and and you know, maybe a um a stove stuck in the corner.
• 2:45
  SPEAKER_00: I mean, it didn't look anything like the photos that she saw online.
• 2:50
  SPEAKER_00: And she was so disappointed to have taken the time to throw her three kids in the car and drive down to the Central Valley to see this glorious home she saw online, uh, to just be very discouraged and felt that she was duped, you know, and that it was a waste of her time and effort.
• 3:06
  SPEAKER_00: And um, so she came back telling us that story.
• 3:10
  SPEAKER_00: And we thought, well, maybe we should do something about this.
• 3:13
  SPEAKER_00: And as we're seeing these AI tools become much more accessible to people, and um, you know, that that there should be a law that says, yeah, if you want to go ahead and enhance photos, you go right ahead of what it could look like, but show us the original and put a disclaimer on that photo that this has been digitally enhanced.
• 3:35
  SPEAKER_02: Yeah, and we we thought that was actually a pretty elegant frame of how to approach it because it doesn't put undue restrictions on the technology, but does protect the consumer.
• 3:44
  SPEAKER_02: And I was also particularly proud that um so like in our software platform is international, in over 150 countries, um but where we normally uh the most stringent uh rules come out of the EU.
• 3:58
  SPEAKER_02: So I was actually particularly proud that like the America was actually leading the way in terms of disclosure and engagement and protections around AI, which is a nice change.
• 4:07
  SPEAKER_02: So appreciate it.
• 4:08
  SPEAKER_00: Well, and then I've I had another coworker who was looking at buying a home, and again, she looks at photos online, she's like, Oh, that room's so grand, it can hold a sectional and a desk and a TV, and she gets out there to look at the the house, and the room is dinky.
• 4:24
  SPEAKER_03: It was like virtual staging in the wrong sofa.
• 4:28
  SPEAKER_00: So, so dimensions also be distorted to make a room look much more grand than it actually is.
• 4:34
  SPEAKER_02: That's interesting.
• 4:34
  SPEAKER_02: And in some of our early like product, as we were starting to engage with this idea when we were seeing the legislation come through, um, one of the conversations actually very similar to the story that you were telling was like we're wondering like why what is sparking this in California in particular.
• 4:48
  SPEAKER_02: And then we were joking about like, well, I mean, in in where we live in South Carolina, if you're gonna go see a house, then maybe you're gonna drive 30 minutes, maybe 45 minutes, if it's a long way away.
• 4:57
  SPEAKER_02: But then we're like, wait, when we visited LA, like if you're driving across LA, that could be like a three-hour commitment on the basis of uh deceptive photo.
• 5:09
  SPEAKER_02: And and we're like, that actually makes a lot of sense.
• 5:12
  SPEAKER_00: Yeah, yeah.
• 5:12
  SPEAKER_00: And we and and since we did this, Bill, we heard so many other stories from people telling us, you know, like this one person said that they were looking at this place online and it had a beautiful pool in the backyard, and they go out there and it's just weeds.
• 5:28
  SPEAKER_00: So how disappointing.
• 5:31
  SPEAKER_02: Artist rendering, buffering.
• 5:34
  SPEAKER_02: Yeah.
• 5:35
  SPEAKER_03: So before we get too far into the conversation, would you mind kind of recapping what this bill is for those that may not be great, uh familiar?
• 5:45
  SPEAKER_00: No, very it's very simple.
• 5:46
  SPEAKER_00: It says that if you're going to use AI to enhance a photo, you have to disclose that.
• 5:54
  SPEAKER_00: And then you have to post the original photo of what it really looks like.
• 5:58
  SPEAKER_00: Simple.
• 5:58
  SPEAKER_00: Pretty simple.
• 5:59
  SPEAKER_03: Yeah.
• 6:00
  SPEAKER_03: I think I think that, like Moses said, uh what I like about this is it actually gives freedom.
• 6:07
  SPEAKER_03: So you can actually market a house and show what its potential is, but at the same time give some level of uh understanding, like this is what it actually is.
• 6:17
  SPEAKER_03: Uh and and we do a lot of editing.
• 6:20
  SPEAKER_03: That is our core business is uh helping real estate photographers do editing.
• 6:24
  SPEAKER_03: And so it actually, I think, gives a lot of freedom for editors to be able to do the things because it was kind of like, oh, is this going to be misrepresenting the house?
• 6:33
  SPEAKER_03: Well, now you can do that in a safe way where you can actually showcase this is the possibilities, but this is what it actually is.
• 6:40
  SPEAKER_03: Um I think it's a good thing.
• 6:42
  SPEAKER_00: I haven't been in the housing market myself, but I'm I'm hopeful that my daughter might move back to California someday.
• 6:49
  SPEAKER_00: So I've been looking, you know, I've been looking at those apps a little bit more, and and I've seen some great creative uses of this where they could show a room as a modern flare or a boho beachy or traditional and the different furniture configurations.
• 7:06
  SPEAKER_00: And I thought, oh my God, I love that.
• 7:07
  SPEAKER_00: It's really great seeing the different looks that a room could take on.
• 7:11
  SPEAKER_02: Yeah, it we we do too.
• 7:13
  SPEAKER_02: And that's like that's part of what we were excited about with it was exactly that is like there's nothing inherently wrong about showcasing that the weed-filled pool could be beautiful if you, the new homeowner, want to make it beautiful, or if you want to redesign this space or add an island.
• 7:31
  SPEAKER_02: Like those kinds of renderings have value in themselves, and I think they can be legitimately used to sell houses.
• 7:37
  SPEAKER_00: Um be honest and transparent, that's all we're saying.
• 7:39
  SPEAKER_02: Yeah, exactly.
• 7:40
  SPEAKER_02: So it's it's a good, it's a good middle space.
• 7:43
  SPEAKER_02: So yeah, you have a little bit of a background in journalism, is that right?
• 7:47
  SPEAKER_00: I do, yeah.
• 7:48
  SPEAKER_00: I got my journalism degree from Cal Poly, San Luis Obispo, and um yeah, I I had set out to be a reporter, a journalist, and took a turn into uh public service.
• 8:00
  SPEAKER_00: So yeah.
• 8:01
  SPEAKER_02: So I was curious if maybe like truth and journalism is like everything, right?
• 8:07
  SPEAKER_02: Maybe under fire in our day.
• 8:08
  SPEAKER_02: But that space was curious if that kind of intersected a little with what was inspiring to you about this particular space is like protecting that.
• 8:17
  SPEAKER_02: But it's very it the bill is very real estate focused.
• 8:20
  SPEAKER_00: Right, right.
• 8:21
  SPEAKER_02: But you've got this challenge in a lot of other spheres, journalism being one of the biggest ones, I think.
• 8:26
  SPEAKER_00: Right, right.
• 8:27
  SPEAKER_00: And you know, and what journalism taught me is that what people see often lands before what they read.
• 8:34
  SPEAKER_00: And and that makes visuals incredibly powerful, yeah, but also incredibly easy to misuse.
• 8:41
  SPEAKER_03: Yeah, the an image is worth a thousand words, and I think that's that's why it's so powerful and why so many people are uh you know inclined to be able to show the house in the best light.
• 8:51
  SPEAKER_03: And uh, staging has been around people, uh regular staging for years, you know, and obviously um professional photographers they can add lighting and use all kinds of camera tricks to make the house look great, but there's like a new line when anyone can just upload a photo into Chat GPT or whatever, and and then all of a sudden it changes a window into a door or adds a staircase where there was a bookcase.
• 9:19
  SPEAKER_03: And that's where I think get into a lot of trouble really fast.
• 9:22
  SPEAKER_00: Yeah, yeah.
• 9:22
  SPEAKER_00: I mean, journalism credibility depends on context, accuracy, not misleading the audience, even unintentionally.
• 9:30
  SPEAKER_00: So that same lens has to apply to um to images.
• 9:35
  SPEAKER_00: And you know, the thing about journalism is that trust is hard to earn and easy to lose.
• 9:42
  SPEAKER_00: So I know my my chief is probably never gonna trust that realtor who posted those photos of that uh house uh again, you know.
• 9:50
  SPEAKER_00: So um, yeah, um honesty and transparency really, really matter.
• 9:55
  SPEAKER_02: Talk to me a little bit about the like the the gray area, if you will, of like how so there's some interpretation to it.
• 10:03
  SPEAKER_02: So you got some specific categories in the bill that are really clear, but then there's other things that people have done for ages of like removing a trash can out of the driveway in post-production or things like that.
• 10:13
  SPEAKER_02: They're pretty innocuous.
• 10:15
  SPEAKER_02: Um, how does how does this work in practice?
• 10:18
  SPEAKER_02: Like, do people make complaints or like how how does this actually get enforced in real life?
• 10:26
  SPEAKER_00: Well, and and about the gray areas, I mean, the the bill clearly states that common photo editing adjustments do not require the disclosure when they don't change the actual representation of the property.
• 10:39
  SPEAKER_00: So, you know, putting a pool in a backyard of weeds, that's changing it.
• 10:43
  SPEAKER_00: But, you know, putting a backdrop of a sunset behind the weeds, that's okay.
• 10:48
  SPEAKER_00: Um, you know, so therefore, you know, changing that sunset or removing a trash can would not require any disclosure.
• 10:55
  SPEAKER_00: So um, you know, so this doesn't forbid any of those traditional staging and editing techniques that currently uh real estate photographers use.
• 11:04
  SPEAKER_00: So that's not what we're going after at all.
• 11:07
  SPEAKER_00: And um, and basically, um, you know, as far as enforcement goes, you know, this is really through the um the department of real estate, and they're really the ones who are going to be primarily responsible for enforcement.
• 11:22
  SPEAKER_00: And our our focus was not on punishment, it was on ensuring that customers are protected.
• 11:29
  SPEAKER_00: And currently the the DRE regulates and licenses real estate brokers and salespersons, and their enforcement process tends to be stepped.
• 11:38
  SPEAKER_00: So, first violation, you get a warning, and then it it graduates.
• 11:42
  SPEAKER_00: Uh, but that's really going to be up to them on any kinds of disciplinary action.
• 11:48
  SPEAKER_02: So a consumer who your chief of staff drives three hours to a deceptive property, would it effectively they would file a complaint with your labor and licensing or something?
• 11:59
  SPEAKER_02: Or I don't know.
• 12:00
  SPEAKER_00: With the department of real estate and and under existing law, any individual or business entity that suffers a financial loss due to misrepresentation can sue for damages.
• 12:11
  SPEAKER_00: So that's already in law.
• 12:12
  SPEAKER_00: We didn't change that.
• 12:13
  SPEAKER_02: I lost my train of thought completely.
• 12:15
  SPEAKER_00: Well, we were talking about complaints and and you know who files it, you know.
• 12:19
  SPEAKER_00: So complaints should be directed to the department of real estate, given that they are responsible for licensure and regulation of real estate brokers.
• 12:28
  SPEAKER_00: So this bill doesn't currently limit who can file a complaint.
• 12:32
  SPEAKER_00: And and as I said before, the DRE would then likely issue a warning to the real estate broker to come into compliance under the law and further enforcement or disciplinary action would uh would not be required.
• 12:45
  SPEAKER_02: Yeah, I feel like there was something kind of scary in the bill.
• 12:48
  SPEAKER_02: I feel like there was like even a mention of potential like criminal penalties or something.
• 12:52
  unknown: Yeah.
• 12:53
  SPEAKER_03: Misdemeanor, maybe.
• 12:54
  SPEAKER_03: I don't know.
• 12:54
  SPEAKER_00: I don't really know I think that's all under existing law that it might have restated.
• 12:58
  SPEAKER_00: So as under existing law, an individual or a business entity that suffered financial loss could uh sue for misrepresentation and get damages.
• 13:10
  SPEAKER_02: Got it.
• 13:11
  SPEAKER_00: But it's just standard drafting in California.
• 13:14
  SPEAKER_03: I do think there is there is a possibility, obviously.
• 13:17
  SPEAKER_03: I mean, you under understand this, you've helped uh you created a bill for this.
• 13:22
  SPEAKER_03: I mean, but there are some serious uh repercussions beyond just you wasted an afternoon to go visit a a property.
• 13:30
  SPEAKER_03: A lot of people buy uh properties online, they see those houses um and they buy them sight unseen.
• 13:37
  SPEAKER_03: And many do.
• 13:38
  SPEAKER_00: I know that's shocking.
• 13:40
  SPEAKER_00: Yeah, but that does not crazy yeah, particularly after COVID.
• 13:43
  SPEAKER_03: I think that was that really became a popular thing to be able to see a house or a property and make that offer.
• 13:50
  SPEAKER_03: And yeah, that transaction happens, but that's carried on even beyond COVID.
• 13:54
  SPEAKER_03: And uh so that that is dangerous territory.
• 13:58
  SPEAKER_03: Um, but I think people even are using this for even more extreme scenarios using AI where you have a very a completely vacant property and they show that there's this what it would look like if a house was on this property, but someone might just see that one photo in isolation of that house on that property and see that it's you know 10% of the cost of what they thought the house would be, you know, what a great deal.
• 14:21
  SPEAKER_03: And they buy this thing and realize there's no house on this vacant lot that they just bought.
• 14:26
  SPEAKER_00: But and that's why the disclosure is so important that if a photo is of this gorgeous home on this beautiful property and with trees and flowers, and it needs to be disclosed that this is what you know what it could look like.
• 14:41
  SPEAKER_00: And then that original photo of that vacant lot needs to be easily accessible to the consumer so they can they can easily see that there's no house on this lot.
• 14:51
  SPEAKER_03: Initially, when you were building this out, how did it uh work with actual uh the California MLSs and uh CAR?
• 15:01
  SPEAKER_03: What was that dialogue like?
• 15:02
  SPEAKER_03: And how did you come to uh what actually ended up in the bill?
• 15:06
  SPEAKER_00: Yeah, no, I'll be honest, when we originally introduced the bill, we were hoping that the realtors would come on in support and we saw it as basically codifying their existing code of ethics.
• 15:17
  SPEAKER_00: And yeah, I was surprised by their opposition, especially given that many realtors who are friends of mine actually love the bill and spoke in support of it.
• 15:25
  SPEAKER_00: Um, and in fact, some of my colleagues who have worked as realtors said, yeah, this makes sense.
• 15:31
  SPEAKER_00: So um, you know, AB 723 basically levels the playing field by holding all listing agents to the same standard for transparency when using those digitally staged or AI enhanced photos.
• 15:45
  SPEAKER_00: So I think it's important to work with opposition as much as possible because sometimes they point out unintended consequences that we aren't seeing.
• 15:54
  SPEAKER_00: Absolutely.
• 15:54
  SPEAKER_00: Um, and while my team and our legal experts that we worked with, uh, that when we consulted with, that were clear that the real estate brokers were only responsible for their own actions or actions taken on their behalf.
• 16:07
  SPEAKER_00: In July, I did amend the bill to address carr's concerns about liability when someone else stages their images without their knowledge.
• 16:16
  SPEAKER_00: And so those amendments made it clear that the real estate real estate broker was only responsible for the virtual staging over which they themselves had control.
• 16:27
  SPEAKER_02: Okay, so in that scenario, oh, like like Zillow has a kind of iffy virtual staging tool kind of a thing.
• 16:34
  SPEAKER_02: Like so that would be like a broker syndicates perfectly compliant photos, and then somebody else goes and uses that tool to for whatever reason.
• 16:44
  SPEAKER_02: Okay, interesting.
• 16:46
  SPEAKER_02: Is that kind of the main tenor of the real estate community's uh challenge with the bill?
• 16:51
  SPEAKER_02: Because I I I actually I I mean, I I was unaware until we were doing a little research for this that there was kind of a a little bit of resistance to this because it seems right in line, like you said, with the realtor code of ethics of just disclosure of what the property is really like.
• 17:06
  SPEAKER_02: So, like what is the what's kind of the theory?
• 17:08
  SPEAKER_02: Like what are they uh what's stuck in their craw?
• 17:10
  SPEAKER_00: You know, I I'm not really sure.
• 17:11
  SPEAKER_00: Like I said, we were a little surprised and we worked very closely with the realtors.
• 17:15
  SPEAKER_00: And I'm I have great respect for the realtors.
• 17:18
  SPEAKER_00: I've got great friends who work in real estate.
• 17:20
  SPEAKER_00: And and it was interesting.
• 17:22
  SPEAKER_00: I was actually at an event that was hosted by a bunch of realtors, and I kind of went in thinking, oh no, are they gonna come after me?
• 17:29
  SPEAKER_00: And this guy comes over and he says, I want to talk to you about AB723.
• 17:32
  SPEAKER_00: I'm like, okay.
• 17:34
  SPEAKER_00: And he's like, we love it.
• 17:36
  SPEAKER_00: It's what we talk about all the time, and realtors are really embracing it.
• 17:40
  SPEAKER_00: I think a lot of, you know, a lot of concern comes from the fear of the unknown.
• 17:45
  SPEAKER_00: Like, what are we really getting after?
• 17:47
  SPEAKER_00: Are we trying to uh, you know, um make realtors' jobs more difficult?
• 17:52
  SPEAKER_00: And are we trying to call them out for something?
• 17:55
  SPEAKER_00: And no, we just want transparency, we want an equal playing field for all realtors and um and just having that consumer protection and that transparency.
• 18:07
  SPEAKER_00: And so I think now in practice, they're really embracing it and uh and utilizing the the freedom that they have now to, like you said, really showcase a property for its potential versus what it actually is, as long as you show what it actually looks like.
• 18:23
  SPEAKER_03: And what is the mechanism for so the actual getting to see the original image and seeing the uh after image, the edited image?
• 18:37
  SPEAKER_03: I I know the bill mentioned some things about adding a link or a QR code, and oftentimes photos are uploaded to the MLS and then they're syndicated to multiple platforms, hundreds of platforms after the fact.
• 18:50
  SPEAKER_03: So if you just put it in the notes, like you're a realtor and you just type it in the MLS.
• 18:55
  SPEAKER_03: Yeah, how's that what is the mechanism that you ultimately landed on to try to let that information travel with the edited photo through syndication?
• 19:04
  SPEAKER_00: Yeah, when the listing photos are syndicated, the property descriptions typically travel with them.
• 19:09
  SPEAKER_00: So as long as the disclosures included in the listing information and there's a clear link back to the original images, I don't see that as a barrier to transparency.
• 19:20
  SPEAKER_00: And because the bill also allows the disclosure to appear directly on the image itself, compliance should be pretty straightforward and the burden on agents and platforms should remain relatively low.
• 19:32
  SPEAKER_02: Well, and that's like in the in the product that we were working on, we settled on having a QR code on the image to link to the original.
• 19:40
  SPEAKER_02: And part of that was and I'm I'm curious if you have any plans to move toward rules for the portals themselves.
• 19:50
  SPEAKER_02: Because even though what you're saying is true with Zillow, that typically a description is going to travel, but um, Zillow also has pretty strict rules about what can be in a real estate description.
• 20:05
  SPEAKER_02: So for instance, if typically an external link in the description that directs off of Zillow gets the member remarks removed from the post.
• 20:17
  SPEAKER_02: And in that scenario, and other things can too.
• 20:20
  SPEAKER_02: So if like the realtor puts their phone number in or things like things that violate Zillow's terms of service, then Zillow will just completely clamp down the listing.
• 20:29
  SPEAKER_02: It'll still show the listing is for sale, but there will be no description.
• 20:32
  SPEAKER_02: So in that scenario, the portal is actually stepping in based on their terms of service and interfering, if you will.
• 20:42
  SPEAKER_02: Like the broker tried to disclose it, but then it got blocked.
• 20:45
  SPEAKER_02: So how would that play out?
• 20:48
  SPEAKER_02: Is that part of the liability the brokers are concerned with?
• 20:50
  SPEAKER_00: Or no, that well, that that's interesting.
• 20:52
  SPEAKER_00: And um, and and one thing we're focusing on, a little side note, uh what we're focusing on in the California legislature are the issues of outcomes, you know, like how is this bill being implemented?
• 21:03
  SPEAKER_00: You know, we pass all these laws and and and then we and then we're not done.
• 21:08
  SPEAKER_00: You know, we also need to look at how is it being implemented?
• 21:12
  SPEAKER_00: And I actually have a bill that's that's being studied right now for that implementation phase because it kind of fell flat.
• 21:18
  SPEAKER_00: And we're looking at, you know, um doing what the bill was intended to do.
• 21:22
  SPEAKER_00: But so at this time, I'm not considering putting the liability on the platform hosting the photos.
• 21:28
  SPEAKER_00: Um, given that the real estate professionals are the ones manipulating the photos, we thought it was best to put the onerous on disclosure on them.
• 21:37
  SPEAKER_00: Um, but you know, I mean, we're always open to ideas and thoughts.
• 21:41
  SPEAKER_00: And as this continues to roll out and get implemented, um, you know, we're always looking at how to enhance it and make it better.
• 21:49
  SPEAKER_02: So it it that makes a lot of sense.
• 21:52
  SPEAKER_02: And obviously, it's iterative and you guys will expand and and refine it.
• 21:56
  SPEAKER_02: But in that particular scenario where, say, Zillow removed the member remarks, where would and and then that hurts your chief of staff.
• 22:05
  SPEAKER_02: Where does that liability lie today?
• 22:09
  SPEAKER_02: Like where would that fall?
• 22:10
  SPEAKER_02: Or is that is that more gray?
• 22:12
  SPEAKER_00: I mean again, I think it's on the real estate folks who were, you know, posting the photos.
• 22:18
  SPEAKER_00: I mean, the owners is on their disclosure.
• 22:20
  SPEAKER_00: So um, but again, you know, as this gets played out in in the wild in the real world, you know, uh, and we hear feedback back from folks, we're we're open to suggestions on on any need to tweak the law or uh do any kind of revision in the future.
• 22:38
  SPEAKER_00: We're actually also we're we've introduced this year a companion bill that applies the same standards to uh rental units.
• 22:47
  SPEAKER_00: So my AB2025 is gonna just do the same disclosure requirements for for renters.
• 22:53
  SPEAKER_02: Oh, that's wonderful.
• 22:55
  SPEAKER_02: Actually, another discussion we've had behind doors is in South Carolina at least, and I think this is around the United States, a lot of times a listing, people will grab all the photos for a listing and then throw it on Craigslist or something like that and advertise it for rent and then try to collect a security deposit and as a scam, right?
• 23:14
  SPEAKER_02: Rip people off of two grand.
• 23:16
  SPEAKER_00: I got scammed once myself.
• 23:18
  SPEAKER_00: Oh, okay.
• 23:19
  SPEAKER_00: Yeah.
• 23:19
  SPEAKER_02: Well, and a lot of times the challenge with enforcing that behavior, at least in South Carolina, is that they haven't actually done anything wrong until they scam somebody out of their money, until they actually take somebody's money.
• 23:34
  SPEAKER_01: Right.
• 23:35
  SPEAKER_02: And so there's not an effective enforcement mechanism for getting that kind of a fraudulent listing taken down because I guess freedom of speech, you can put up a listing.
• 23:45
  SPEAKER_02: But one of the things that we've been curious about is if there could be something to pull on there legislation-wise, on they are actually violating other laws.
• 23:56
  SPEAKER_02: They're violating licensing laws.
• 23:57
  SPEAKER_02: They're not allowed to copyright photos that aren't theirs.
• 24:02
  SPEAKER_02: And even more than that, in this particular law, I mean, they are I mean, arguably, I think they're running afoul of that, particularly for expanded to rentals, of their their falsely Do you see what I'm saying?
• 24:14
  SPEAKER_02: Like there's an upstream challenge of preventing harm, even though there's an enforcement mechanism once harm happens in those kinds of scenarios.
• 24:22
  SPEAKER_00: Right, right.
• 24:22
  SPEAKER_00: Yeah.
• 24:23
  SPEAKER_00: Yeah.
• 24:23
  SPEAKER_00: And, you know, and and I come from this, I come to this space really from the perspective of the consumer and and what it is, what information I'd like to have when making a decision on a property to rent or a property to buy, and whether I'm actually going to take the time to go out and look at it.
• 24:40
  SPEAKER_00: Um, and it just all the information needs to be fully disclosed as far as what what state is this unit in?
• 24:48
  SPEAKER_00: Is it a fixer-upper or is it a brand new build with high-end appliances?
• 24:52
  SPEAKER_00: Or, you know, is it uh is it a room that could actually fit a sectional and a TV and a chair, or is it something that's so small I could barely put a desk in it?
• 25:02
  SPEAKER_00: So um, you know, I think it's really, you know, my focus is really on the consumer and the disclosure.
• 25:09
  SPEAKER_00: And um, I'm not pushing for punishment.
• 25:12
  SPEAKER_00: I'm just looking for enforcement uh from the from those that from the department of real estate that that does this work and accountability.
• 25:19
  SPEAKER_02: Yeah.
• 25:20
  SPEAKER_00: Yeah.
• 25:20
  SPEAKER_02: What about beyond California?
• 25:22
  SPEAKER_02: Like we're we're kind of we're monitoring this because we see it as potentially a template to expand to other states.
• 25:27
  SPEAKER_02: Yeah.
• 25:27
  SPEAKER_02: Um are I I'm not totally sure how that works in legislative processes.
• 25:31
  SPEAKER_02: Are like other states talking with you about the ramifications of this bill?
• 25:35
  SPEAKER_02: Is there any interest from a federal level for this type of experience?
• 25:39
  SPEAKER_00: Yeah, so we have great working relationship and and and organizations in place.
• 25:44
  SPEAKER_00: Um so um I'm number one, I'm part of a multi-state AI working group where we track all the AI-related bills.
• 25:51
  SPEAKER_00: And I have another one that's in the election side.
• 25:54
  SPEAKER_00: And so those are all being talked and uh tracked and uh discussed.
• 25:58
  SPEAKER_00: And we have the National Conference of State Legislatures that also looks at what other states are doing and uh and they're tracking AI legislation in the nation.
• 26:09
  SPEAKER_00: So I've not heard of any other attempts being made to solve this problem, uh, you know, but but it's out there now and it's been in these different uh publications.
• 26:19
  SPEAKER_00: So I think California is really helping to define what consumer transparency looks like in the real estate marketplace.
• 26:26
  SPEAKER_00: And I would anticipate other states will be looking to California and duplicating efforts in their state.
• 26:33
  SPEAKER_00: And as far as the federal level is concerned, I've not heard of any attempts being made at the federal level.
• 26:37
  SPEAKER_00: And um, yeah.
• 26:39
  SPEAKER_03: Yeah, I think uh this is hoping.
• 26:41
  SPEAKER_03: Yeah, I I think this is actually really kind of a landmark bill in a lot of ways.
• 26:45
  SPEAKER_03: Um, it's one of the first bills that's really trying to address this generative AI media authenticity problem that's becoming democratization of that.
• 26:56
  SPEAKER_02: Like you've always been able to do this stuff, but you couldn't do it in two minutes on your cell phone.
• 27:01
  SPEAKER_00: Right, right.
• 27:02
  SPEAKER_00: And and it comes from, you know, real lived experience from a real person.
• 27:07
  SPEAKER_00: And when I presented the bill, I I didn't have, I didn't have sponsors, I didn't have groups and organizations that were fueling this effort.
• 27:16
  SPEAKER_00: It was just us.
• 27:17
  SPEAKER_00: It was just, you know, my chief of staff.
• 27:19
  SPEAKER_00: And so what we did is we we presented pictures.
• 27:22
  SPEAKER_00: We had the picture of the reality of the kitchen and the picture that was, you know, posted on the website.
• 27:30
  SPEAKER_00: And I basically said, a picture's worth a thousand words.
• 27:34
  SPEAKER_00: See for yourself.
• 27:35
  SPEAKER_00: And and that's all it really took.
• 27:37
  SPEAKER_00: I mean, that reality of like, yeah, I'd be frustrated if I drove those two and a half hours with my three kids down to a location to look at a home that I was expecting this beautiful grand kitchen, and I got, you know, something that looked like a warehouse.
• 27:53
  SPEAKER_03: That'd be very disappointing.
• 27:54
  SPEAKER_03: Yes.
• 27:55
  SPEAKER_03: Yep.
• 27:55
  SPEAKER_00: Yeah, yeah.
• 27:56
  SPEAKER_00: So I think that was really compelling for my colleagues to actually see what my chief of staff saw in her um work to find a or in her effort to find a home.
• 28:06
  SPEAKER_00: She has since found one and they are doing very well, and she's putting in a swimming pool.
• 28:13
  SPEAKER_03: Inspired by the AI photos, maybe.
• 28:15
  SPEAKER_03: Yeah.
• 28:17
  SPEAKER_02: Today we're gonna pause for to highlight a feature within prop media that is particularly apropos to this conversation.
• 28:25
  SPEAKER_02: So over the last couple of months, we've actually developed a tool in concert with the launch of this legislation, AB723, which is a disclosure tool, which can be used by realtors or photographers.
• 28:35
  SPEAKER_02: I think it would be a brilliant tool for an enterprising photographer to start offering to make this really easy for your realtors.
• 28:41
  SPEAKER_02: It's one of them, it's a great way to earn business.
• 28:43
  SPEAKER_02: If you're making something easy for the realtor that they don't have to do, it's a great reason for them to use you.
• 28:49
  SPEAKER_02: So if you go to propmedia.com slash disclosure, you will find an entire tool.
• 28:54
  SPEAKER_02: It's completely free to use where you can put an altered photo in and get a QR code stamped onto the photo that would link to the unaltered version of the photo.
• 29:05
  SPEAKER_02: And you might look at that and think, okay, that's a little clunky.
• 29:07
  SPEAKER_02: Could we do it a different way?
• 29:08
  SPEAKER_02: But the reason we chose a QR code is that you bypass any of the liability issues that the realtor might face, of say, putting the link into member remarks or something like that, that might not syndicate to a page that it needs to syndicate to in order to remove their liability from the legislation.
• 29:26
  SPEAKER_02: So by having it as a QR code, it always survives syndication.
• 29:30
  SPEAKER_02: So whether it's in the MLS system or Zillow or Redfin, it's always going to be there.
• 29:34
  SPEAKER_02: And the realtor doesn't have to worry about the disclosure because it's going to be there.
• 29:39
  SPEAKER_02: We're also launching Pro Tools, which if you want to move past the free, I've got a couple of these to do, into bulk uploading and things along those lines to make your life easier.
• 29:50
  SPEAKER_02: There's a pro tool that you can look at.
• 29:52
  SPEAKER_02: And for brokers, because brokers are the ones, let's be real, most realtors would rather not even touch this, but the brokers are the ones who are interested in the liability of the office, protecting the office from legislation and things like this.
• 30:03
  SPEAKER_02: And that's where we've really built like a bulk licensing package where if you're a broker and you're like looking for a way to make it easy for your agents to stay compliant with this law, or looking for great photographers or photographers providing this for their users.
• 30:17
  SPEAKER_02: Like there's lots of options for how to do this, but we want to provide those bulk tools so that people can start exploring how to get this job done in the real world in real estate in California.
• 30:28
  SPEAKER_02: So check it out propmedia.com slash disclosure.
• 30:32
  SPEAKER_03: Uh am I allowed to talk in ads?
• 30:34
  SPEAKER_02: I don't know.
• 30:35
  SPEAKER_02: You're still going to design a beautiful one, aren't you?
• 30:37
  SPEAKER_02: Like one of these days.
• 30:38
  SPEAKER_02: You can talk, yeah.
• 30:39
  SPEAKER_03: What do you want to add?
• 30:39
  SPEAKER_03: You should know also if you're a Pixel Mob user, we've made it really easy to do disclosures.
• 30:43
  SPEAKER_03: That's a great point.
• 30:44
  SPEAKER_03: So you don't have to go through a separate workflow.
• 30:46
  SPEAKER_03: Your photos are already there in Pixel Mob.
• 30:48
  SPEAKER_03: If you want to disclose uh edits that have already been made, those are already notated in Pixel Mob, and you just click on uh the little disclosure toggle when you're exporting your photos, and you can deliver both the regular edited one and one with a disclosure badge.
• 31:03
  SPEAKER_02: Yeah, that's great.
• 31:04
  SPEAKER_02: So there's a free tool for anyone, Pixel Mob user or not, you can check it out.
• 31:08
  SPEAKER_02: And then if you're using Pixel Mob itself, you don't even have this in your workflow because you just click a button and it's right there for you for you to deliver to the realtor.
• 31:16
  SPEAKER_02: Thanks.
• 31:16
  SPEAKER_02: And back to us.
• 31:18
  SPEAKER_03: Um, obviously, we've talked about this.
• 31:20
  SPEAKER_03: We work with uh a lot of photographers, and I think they kind of wonder, knowing that there's this bill out there and that there might be more laws that might be affecting them around the country and around the world, even.
• 31:33
  SPEAKER_03: Um they wonder what their responsibility in this equation is.
• 31:38
  SPEAKER_03: Um, this is a new concept.
• 31:40
  SPEAKER_03: Realtors are still learning about this bill in California.
• 31:44
  SPEAKER_03: Um, but I think there's also, you really nailed this before that this is uh this bill codifies a lot of the code of ethics that a lot of existing rules already exist within these uh different uh realtor organizations.
• 32:00
  SPEAKER_03: Um so there's already an expectation and has been for years about representing houses um and through traditional editing means and compositing in through Photoshop and other stuff.
• 32:12
  SPEAKER_03: Um but now prevalence of AI and all that, uh, this has made made this a big problem.
• 32:19
  SPEAKER_03: So you moved quickly, you got the law out there.
• 32:22
  SPEAKER_03: Um but what is this education process like?
• 32:25
  SPEAKER_03: And what are the realtors or the photographers need to be thinking about as they're working with realtors who ultimately they're the ones that are accountable for representing the home?
• 32:34
  SPEAKER_03: The photographers might be the ones that actually do the editing.
• 32:37
  SPEAKER_03: Um how can they be a part of the solution?
• 32:40
  SPEAKER_00: Yeah, so as you said, while the photos begin with the photographers and are refined and staged by editors, ultimately the decision of whether or not to use that photo in an advertisement rests with the real estate broker.
• 32:53
  SPEAKER_00: And as the real estate agent who's posting the photo or directing someone to post the photo, and as the decision maker, that the buck stops with them.
• 33:02
  SPEAKER_00: So, you know, the primary compliance responsibility should remain with the broker, the salesperson, or the person acting on behalf of who is publishing that advertisement because they are the ones marketing the property to consumers.
• 33:17
  SPEAKER_00: So as long as the photographer and editor are up front with the person who commissioned them about whether or not to they're gonna use digital staging in their process or not, they should not bear the responsibility of compliance with the law.
• 33:31
  SPEAKER_03: I think that would be a relief for a lot of photographers because they think they see they hear about this law and are concerned that they may be in trouble for editing or something like that.
• 33:41
  SPEAKER_00: Um and you know, and my friends who are realtors, I mean, they're intimately involved with the properties that they're selling, you know, that they're they're they're they're selling.
• 33:48
  SPEAKER_00: So they should know whether elements have been added and should be making sure that their listing complies with the disclosure and access requirements of the law.
• 33:58
  SPEAKER_02: Yeah, and I I definitely can see that I I used to coach a number of real estate agents out in California, and they tend to have uh you have much higher price points than the majority of the United States.
• 34:08
  SPEAKER_00: I do, yes.
• 34:09
  SPEAKER_00: I represent the two most expensive places to live in the nation.
• 34:12
  SPEAKER_00: Santa Cruz is lovely.
• 34:15
  SPEAKER_00: Yeah.
• 34:15
  SPEAKER_02: Um, and and so many of the like I would I would top I would coach top agents, but my California agents might be doing 50, 60, 70 houses in a year.
• 34:28
  SPEAKER_02: Whereas my top agents who were in Texas or in Alabama were doing like 300 or 400 in a year.
• 34:36
  SPEAKER_02: And there are significantly different um business models, if you will, where one is very production-centric and you're turning out quality listings, but there would be much less bespoke.
• 34:48
  SPEAKER_02: Um I I could definitely see many of those realtors probably not reviewing photos or not significantly reviewing photos.
• 34:56
  SPEAKER_02: Or I am curious, there seems to be a little bit of ambiguity of how editor how uh photographers may need to help in that sometimes photographers and editors are gonna work to create the photo that they think the realtor is gonna like.
• 35:09
  SPEAKER_02: And if they're not careful to say that they made this material change, then it sounds like that could actually put the realtor on the hook for some liability.
• 35:19
  SPEAKER_02: Right.
• 35:19
  SPEAKER_02: Probably not anything as dramatic as like they completely changed the kitchen.
• 35:24
  SPEAKER_00: Right, right.
• 35:25
  SPEAKER_02: But editing components and not noticing small changes, I think could still have ramifications that editors and photographers probably should be aware of.
• 35:34
  SPEAKER_02: Because I mean, it's great we lose a client if they get sued uh because of your work.
• 35:38
  SPEAKER_00: Yeah, you know, and again, I think that if there's a violation the first round, it's a warning, you know.
• 35:44
  SPEAKER_00: And um, and I mean, my understanding, I'm not a realtor, but my understanding is that a person who is marketing and showing the property and is going to get the the profits from selling that property should be pretty intimately involved with the property and and and know where the doors are and know what size rooms there are, and know um, you know, um, you know, those features that that are, you know, that sell the house or or that to disclose what the house looks like.
• 36:16
  SPEAKER_00: So, you know, so when changes are made that are so dramatic, like putting in a swimming pool in a backyard without one, or you know, putting in a remodeled kitchen where there's not one, or staging a grand living room that's that's basically the size of an office, you know, they should be able to understand that that's not um real and that that needs to be labeled and original photos need to be posted.
• 36:42
  SPEAKER_03: Makes sense.
• 36:43
  SPEAKER_03: So AI acceleration is moving this stuff so quickly.
• 36:49
  SPEAKER_00: Oh, it sure is.
• 36:51
  SPEAKER_03: And you reacted very quickly.
• 36:52
  SPEAKER_03: I think this was a uh very timely bill and uh put together and approved very quickly.
• 36:59
  SPEAKER_03: Um but is this a future-proof solution?
• 37:03
  SPEAKER_03: Do you see this lasting long term?
• 37:06
  SPEAKER_03: What with these accelerations?
• 37:08
  SPEAKER_03: How do you see this bill developing?
• 37:10
  SPEAKER_03: Or do you think you've kind of figured it out?
• 37:13
  SPEAKER_00: Yeah, yeah, these tools are are moving rapidly, that's for sure.
• 37:16
  SPEAKER_00: And I do think that AB723 is future-proof.
• 37:20
  SPEAKER_00: So when drafting the bill, we specifically chose to use a definition of digitally altered that included photo editing, software, and artificial intelligence.
• 37:29
  SPEAKER_00: So artificial intelligence is defined in our government code and accounts for changes in the technology over time.
• 37:37
  SPEAKER_00: So the standard is pretty simple.
• 37:39
  SPEAKER_00: If the image materially changes the representation of the property, it must be disclosed.
• 37:45
  SPEAKER_00: And that principle should hold even as the technology evolves.
• 37:49
  SPEAKER_02: As we kind of wrap up, uh what um like what would be your vision of what does this look like?
• 37:55
  SPEAKER_02: So this this bill comes, it is in effect, but it it evolves over the next year or two, gets refined.
• 38:02
  SPEAKER_02: Like what is what could the industry do to proactively make your job easier?
• 38:07
  SPEAKER_02: That there is a world, a vision of better consumer protection in real estate.
• 38:12
  SPEAKER_00: Yeah.
• 38:13
  SPEAKER_00: So I mean, even before this bill became law, we saw many real estate agents who use digital staging, disclosing, and labeling images as virtually staged.
• 38:22
  SPEAKER_00: So the main issue was that the labeling was at the discretion of the individual broker.
• 38:27
  SPEAKER_00: Right.
• 38:28
  SPEAKER_00: So by ensuring this uniform policy, consumers are more able to trust the listing before them is actually real.
• 38:35
  SPEAKER_00: And like I said, whether it's a new build with the high-end features or a fixer-upper.
• 38:40
  SPEAKER_00: I mean, you know, many of us are looking for that, you know, price point of a cheaper property that we want to do the work to make it ours.
• 38:48
  SPEAKER_00: And as long as those original photos are posted with the enhanced photo, then we're good.
• 38:54
  SPEAKER_00: So, um, and if the digitally altered image is significantly different from the condition of the property, the consumer has that access to those unaltered photos to verify for themselves.
• 39:06
  SPEAKER_00: So I see this bill as easy for the industry to implement.
• 39:11
  SPEAKER_00: If you alter it, label it, and provide the access to the unaltered image.
• 39:16
  SPEAKER_00: That is a simple, common sense standard that promotes transparency without getting in the way of effective marketing.
• 39:23
  SPEAKER_02: Well, as we wrap up, how can people, if they want to follow along with your assembly uh journey or follow you or this bill, where can they kind of keep up with you?
• 39:33
  SPEAKER_00: Sure.
• 39:34
  SPEAKER_00: I have a website for if you just Google uh Gail Peller and Assembly, you can uh find me there and we do a monthly newsletter.
• 39:43
  SPEAKER_00: And but if you're wanting to track legislation, there's a ledge info portal where you can actually put in what issues you're searching for, and you could track legislation as it gets introduced throughout the year.
• 39:56
  SPEAKER_00: So lots of ways to connect.
• 39:58
  SPEAKER_00: And um, you know, my district includes Santa Cruz and Santa Clara counties, and uh where we have district staff who are um open to meetings and to talk further about either this bill or future legislation ideas.
• 40:12
  SPEAKER_03: Excellent.
• 40:13
  SPEAKER_03: And we're we'll link to uh the actual bill AB723 for those who are listening that want to go and actually check this out and understand uh the specific ramifications um so they'll be able to read through that and understand it for themselves.
• 40:28
  SPEAKER_03: Very simple and easy to understand, I think uh well worded and thought through, Bill.
• 40:32
  SPEAKER_00: Thank you.
• 40:34
  SPEAKER_00: I appreciate spending the morning with you and talking about this great new law.
• 40:38
  SPEAKER_00: And we hope other states follow suit.
• 40:40
  SPEAKER_03: Thank you, Gail.
• 40:40
  SPEAKER_03: Appreciate it.
• 40:41
  SPEAKER_03: Thank you.
• 40:41
  SPEAKER_03: Thanks for your time.
• 40:42
  SPEAKER_00: All right, be well.