Collins | Online Compliance Issues Offer Potential Pitfalls

Have you been following the controversy about the Taco Bell potato ad? It’s the one in which the fast-food chain superimposes its CEO’s features and voice on a potato to announce that they will begin serving spuds again. Adweek writer Alexa Heinrich says the spot is “candid” and has “a fun young vibe.”

However, viewers branded the original version a marketing and accessibility failure because it was originally released without captioning. This has since been rectified.

Heinrich says that something like 85% of online viewers watch such videos with the sound off; I know I do. She also points out that the World Health Organization (WHO) estimates 466 million of the world’s population are deaf or hard of hearing. Those comments got me thinking about the “Dear Expert” column in the November/December 2020 issue of MFM’s member magazine, The Financial Manager. In it, Patricia Kocsondy, senior vice president and the media professional liability manager for Chubb, responds to a question about online compliance regulations that could trip up media businesses looking to build online revenues.

Americans With Disabilities Act

Among what Kocsondy calls, “evolving website compliance issues” are those related to the Americans with Disabilities Act. This law requires businesses to “provide public accommodations” for those with disabilities “so they can have ‘full and equal enjoyment’ of the goods and services offered.” Recent court rulings seem to have expanded what can be termed “public accommodations” to include websites.

Without federal regulations clarifying what should or should not be considered “public,” interpretation varies widely. In some areas such accommodations are limited to brick-and-mortar businesses such as “restaurants and retail stores, because they fit one of the categories identified by the ADA as a ‘public accommodation.’ ” Elsewhere, online businesses have also been ruled covered under ADA. As always, it’s best to consult legal counsel to get a clear understanding of obligations and potential opportunities.

Copyright

As we (and others) have noted before, the same technology that makes it easy to copy a photo or a song clip to another website also makes it easy for the copyright holder to find unauthorized uses of copyrighted material. Not long ago there were several stories about law firms specializing in suing for use without appropriate permission.

While such law firms haven’t been in the news as much of late, that does not mean they have stopped pursuing those who they believe have posted copyrighted material without proper authorization. Kocsondy urges her readers to “become familiar with laws involving the usage of images, video, and music.”

It’s also critical that the company has all the necessary rights. For example, companies must have public performance rights to play music during an event. At MFM, we pay the performing rights organizations such as ASCAP or BMI for music played during our annual conference. If, however, we would like to use a clip of one of those performances on our website, we also need to purchase synchronization (“synch”) rights. And, as I learned last year, the public performance rights for an online event are different from those for an in-person conference.

As Kocsondy says, there are many potential copyright traps. The best advice here is to never assume, instead consult copyright counsel.

Automatic Renewal

We are all familiar with subscription-based models that lock in customers with free trials and gifts to ensure ongoing revenue streams for their companies. For better or worse, state legislators have their eye on this practice. Kocsondy says: “Attaching provisions that renew the subscription automatically or convert it from a free subscription to a paid one,” is now “closely regulated in at least 26 states.”

The general approach of the regulations is to require the consumer’s proactive consent before applying charges. Additionally, “the automatic renewal text must be displayed in a ‘clear and conspicuous manner.’ ”  Some state regulations go as far as to stipulate font size and where the text must be placed in relationship to the subscription offer.

To drive home the seriousness of this issue, Kocsondy relates the history of the $250 million class action lawsuit against Ancestry.com. It started with a woman who said that, had she known that the 14-day free trial that she’d accepted would result in an ongoing monthly $39.99 charge to her credit card; she would never have provided the card information. Our Chubb expert says that many other people had the same reaction; the result was the class action lawsuit.

While the need for additional revenue remains a driving force in the media industry, especially as businesses continue to deal with the twin problems of the COVID-19 pandemic and a recession, Kocsondy cautions that companies should pause to consider the “potential legal and reputational ramifications of evolving federal, state and local regulations” before setting up an online commercial venture.

I would add that the new federal administration has an ambitious agenda, which is likely to include new consumer and property rights protections. As these begin to take shape, we at MFM will include them in our ongoing educational programs. Already on the agenda for 2021 are a free Roundtable Transformation Series, with the first event being held on Feb. 9; our Media Tax Summit, March 2-3; the MFM CFO Summit, March 11-12; monthly Distance Learning webinars; and our annual conference, Media Finance Focus 2021, May 11-July 29.

Recognizing the potential challenges related to travel in the first half of 2021, all of these programs will be offered virtually. I urge you to check our website — https://www.mediafinance.org — for program descriptions and to register.

Mary M. Collins is president and CEO of the Media Financial Management Association and its BCCA subsidiary, the media industry’s credit association. She can be reached at [email protected] and via the association’s LinkedIn, Facebook, Instagram, and Twitter accounts.