By Skip Oliva, Citizens for Voluntary Trade

Lala Wang, founder and CEO of MLX, an online real estate listings service, this week announced her decision to make a final appeal to the United States Supreme Court to resurrect her business of enabling renters, buyers, sellers, landlords, and brokers the access and exchange of property listings, resources, and information on-demand via www.mlx.com.

Wang has spent the last eight years battling New York State regulators over a disputed Apartment Information Vendors (AIV) license required by law for individuals selling apartment rental listings. The AIV statute is an antiquated 1975 law intended to prevent potential fraud in the real estate market, but in its current form, the law penalizes innovative businesses like Wang’s MLX, which offers consumers access to property listings previously available exclusively to brokers.
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December 16, 2003: The People Versus LaLa Wang by Skip Oliva
The Daily Journal of Capitalism (www.capitalismcenter.org)

Business regulation is the bread-and-butter of state government. As fast as individuals can create whole new professions, local regulators can pass a bunch of rules that stunt professional growth. The regulators claim their presence is necessary to protect the “public interest� by “protecting consumers� and “ensuring competition�. In almost any context, however, the stated objectives conflict with the regulators’ real mission—to obtain more power for themselves at the expense of private businessmen.

In 1975, the New York State legislature discovered a problem in the apartment rental market. It seemed a number of unsavory characters were selling customers fraudulent “apartment information� lists. The lists promised information on the location and availability of apartments for rent. In reality, many of the apartments were unavailable or non-existent. Often the people selling the lists did nothing more than copy out-of-date listings from the newspaper classifieds. Accordingly, the state legislature felt the need to act.

The legislature might simply have banned any person from selling fraudulent apartment information. But that would do little for the interests of Albany’s professional regulators. Instead, the legislature decided to judge all persons selling apartment lists—including licensed real estate brokers, people already subject to strict regulatory requirements—guilty of a crime unless they obtained a new professional license. This is a classic regulatory paradigm: No person can be presumed honest without prior government approval. In this case, no person is trustworthy to sell apartment listings unless he or she is a licensed “apartment information vendor�.
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