opinion

Have You Had a Legal Checkup Lately?

Have You Had a Legal Checkup Lately?

Over two years ago, I wrote an article for XBIZ titled “Preventing Legal Problems Before They Start” (which I recommend checking out sometime).

I discussed the importance of having your lawyer conduct regular “legal checkups” to ensure that your adult entertainment business is running in accordance with applicable law, as well as what such a checkup should include — and why, more than ever, it is essential that you are up-to-date on the latest laws and regulations that affect your business and the consequences of non-compliance.

There is no such thing as a ‘standard privacy policy’ and stealing another website’s privacy policy is suicide.

The article also stressed that business operators taking the “if it isn’t broken, don’t fix it attitude” is nothing more than driving towards a dead end.

Although I wrote this article back in May 2017, I continue to be regularly contacted by XBIZ readers about it and am proud to say it has led to saving adult business operators a great deal of pain and suffering.

So now, after two years of conducting “legal checkups,” I thought that it would be a great opportunity to share a few of the most common findings.

Stolen Term Syndrome

I’ve spoken and written ad nauseum about the dangers of stealing the legal terms and disclaimers from another website because you think that all legal disclaimers are all the same. Here is a perfect example of a disaster that I encountered as a result of a company trying to save a few bucks. My client (the good guys) had significant legal claims against a certain company (the bad guys).

At some point, the bad guys decided to steal another website’s legal terms without legal review. As it turns out, despite having virtually no connection to the State of Michigan (as they were located in a state thousands of miles away), their stolen terms had a clause that bound them to litigate all disputes in the State of Michigan. As you can imagine, the bad guys were not too thrilled about getting sued in a jurisdiction they’d never even visited. Oops!

See, data security and the handling of sensitive data is a war being fought by virtually every state and country. There is no such thing as a “standard privacy policy” and stealing another website’s privacy policy is suicide. Each week, another jurisdiction passes a new law related to data handling and is stepping up the penalties associated with violations. This includes both extreme civil fines that can easily bankrupt a business and potential criminal prosecution for certain types of violations.

One of the most common laws being passed in jurisdiction after jurisdiction imposes severe penalties for making a misrepresentation in a privacy policy — so, does it make sense to just copy and paste someone else’s privacy policy? If you still can’t answer that question, then I encourage you to talk to your lawyer … now! As an aside, if you still aren’t taking the GDPR seriously and haven’t gotten your business into compliance, then you are playing with fire.

Fracture of the DMCA

It is ludicrous that in 2019, I still have to constantly remind operators of websites and platforms that support user-submitted content that DMCA protection is monumentally essential. No matter how many copyright infringement lawsuits get filed and make headlines, apparently the message is still not being conveyed properly.

During the course of “legal checkups,” I have encountered numerous individuals and businesses that believe that they have done everything necessary to avail themselves of the DMCA Safe Harbor defense should it ever become necessary, but then I find out a lot of folks don’t realize that as a service provider, you are required to designate an agent to receive notifications of claimed infringement with the United States Copyright Office.

No registration in the DMCA designated agent directory means no safe harbor protection. Over and over, during the course of performing legal checkups and a DMCA compliance audit, I’ve had people assure me that they are compliant because they have a webpage titled DMCA, with a functioning email address. When I ask the person whether they’ve registered with the United Copyright Office, the most common answers I get are “I thought that was optional” and “What’s that?” Hence, my diagnosis is the person is suffering from a “fracture” of the DMCA.

Pre-Checked Box Blindness

Website operators and business owners are typically very proud, and they should be. After all, they are running successful online businesses in one of the most highly censored arenas in the world. When clients come to me asking for a “legal checkup,” 9 out of 10 times they tell me that they don’t expect me to find anything wrong and “maybe just a tweak here and there.”

I usually follow up by asking whether they believe their business is compliant with the various regulations enforced by the dreaded FTC, including ROSCA. Once again, the client responds by saying “Oh, absolutely … I’m sure you won’t find any serious issues.” And with a few clicks of my mouse, I head to the client’s signup page, where I find nothing but negative options (aka pre-checked boxes).

ROSCA specifically places limits on pre-checked boxes and makes it illegal for a person or company to charge any consumer for any goods or services sold in a transaction through a negative option, unless the person: (a) “provides text that clearly and conspicuously discloses all material terms of the transaction before obtaining the consumer’s billing information; (b) obtains a consumer’s express informed consent before charging the consumer’s credit card, debit card, bank account or other financial account for products or services through such transaction; and (c) provides simple mechanisms for a consumer to stop recurring charges from being placed on the consumer’s credit card, debit card, bank account or other financial account.” My diagnosis is pre-checked box blindness.

The good news is that all of the issues I commonly see are curable and can be resolved with a little time, effort and investment in proper legal compliance. Like I wrote back in 2017, “a proper legal checkup” will give you the opportunity to talk to your lawyer about past, present and future business intentions. As much as a “legal checkup” enables your attorney to get a handle on where you may have loose ends to tie up, it also presents a unique opportunity for you to be educated on the various changes and creations to applicable law.

Don’t wait until it’s too late.

Corey D. Silverstein is the managing and founding member of Silverstein Legal. His practice focuses on representing all areas of the adult industry and his clientele includes hosting companies, affiliate programs, content producers, processors, designers, developers, operators and more. He is licensed in numerous jurisdictions including Michigan, Arizona, the District of Columbia, Georgia and New York. Contact him at MyAdultAttorney.com, corey@silversteinlegal.com and (248) 290-0655.

Related:  

Copyright © 2024 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More Articles

opinion

How to Halt Hackers as Fraud Attacks Rise

For hackers, it’s often a game of trial and error. Bad actors will perform enumeration and account testing, repeating the same test on a system to look for vulnerabilities — and if you are not equipped with the proper tools, your merchant account could be the next target.

Cathy Beardsley ·
profile

VerifyMy Seeks to Provide Frictionless Online Safety, Compliance Solutions

Before founding VerifyMy, Ryan Shaw was simply looking for an age verification solution for his previous business. The ones he found, however, were too expensive, too difficult to integrate with, or failed to take into account the needs of either the businesses implementing them or the end users who would be required to interact with them.

Alejandro Freixes ·
opinion

How Adult Website Operators Can Cash in on the 'Interchange' Class Action

The Payment Card Interchange Fee Settlement resulted from a landmark antitrust lawsuit involving Visa, Mastercard and several major banks. The case centered around the interchange fees charged to merchants for processing credit and debit card transactions. These fees are set by card networks and are paid by merchants to the banks that issue the cards.

Jonathan Corona ·
opinion

It's Time to Rock the Vote and Make Your Voice Heard

When I worked to defeat California’s Proposition 60 in 2016, our opposition campaign was outspent nearly 10 to 1. Nevertheless, our community came together and garnered enough support and awareness to defeat that harmful, misguided piece of proposed legislation — by more than a million votes.

Siouxsie Q ·
opinion

Staying Compliant to Avoid the Takedown Shakedown

Dealing with complaints is an everyday part of doing business — and a crucial one, since not dealing with them properly can haunt your business in multiple ways. Card brand regulations require every merchant doing business online to have in place a complaint process for reporting content that may be illegal or that violates the card brand rules.

Cathy Beardsley ·
profile

WIA Profile: Patricia Ucros

Born in Bogota, Colombia, Ucros graduated from college with a degree in education. She spent three years teaching third grade, which she enjoyed a lot, before heeding her father’s advice and moving to South Florida.

Women In Adult ·
opinion

Creating Payment Redundancies to Maximize Payout Uptime

During the global CrowdStrike outage that took place toward the end of July, a flawed software update brought air travel and electronic commerce to a grinding halt worldwide. This dramatically underscores the importance of having a backup plan in place for critical infrastructure.

Jonathan Corona ·
opinion

The Need for Minimal Friction in Age Verification Technology

In the adult sector, robust age assurance, comprised of age verification and age estimation methods, is critical to ensuring legal compliance with ever-evolving regulations, safeguarding minors from inappropriate content and protecting the privacy of adults wishing to view adult content.

Gavin Worrall ·
opinion

Account-to-Account Payments: The New Banking Disruptor?

So much of our industry relies upon Visa and Mastercard to support consumer payments — and with that reliance comes increased scrutiny by both brands. From a compliance perspective, the bar keeps getting raised until it feels like we end up spending half our time making sure we are compliant rather than growing our business.

Cathy Beardsley ·
profile

WIA Profile: Samantha Beatrice

Beatrice credits the sex positivity of Montreal for ultimately inspiring her to pursue work in adult entertainment. She had many friends working in the industry, from sex workers to production teams, so it felt like a natural fit and offered an opportunity to apply her marketing and social media savvy to support people she truly believes in and wants to see succeed.

Women In Adult ·
Show More