Is your online subscription plan breaking the law?
I’ve been involved in selling (and reporting on) online subscriptions, mainly for premium B2B content, since 1995. On a daily basis. So I thought I knew the laws and regulations that surround paid content. Turns out, according to our latest research, that I was completely wrong.
In fact, there are lots of state laws, FTC regulations, and even Federal Reserve Board regulations that govern how subscription sites market themselves and communicate with subscribers. Some of them are new (a California state law about auto-renews just came into effect on Dec. 1) and some have existed for years but are only now being applied in force. The laws and regulations, which govern any business selling subscriptions via auto-renew (whether they be month-to-month, quarterly or annual terms), cover many facets of paid content models:
- Paywalls: the language of your offer, the typeface your offer details are in, where on the page offer details appear.
- Trials: the minimum length of your trial offer and what new customers must understand completely before you begin charging the account.
- Price increases: specific notifications you must send subscribers before you increase prices – including the timeframes in which you must send them and by what media (note: email alone isn’t good enough for some accounts).
- Auto-renew account notices: how often you have to send auto-renewal reminders (at least annually, even to people who sign-up for month-to-month subscriptions), when you have to send them prior to the end of an annual term, and by what media channel you should send them (yet again, email alone isn’t good enough for some accounts).
As you might expect, there are also rules and regulations about guarantees, cancellation policies and the way you word discounting offers.
The good news for publishers is that the changes you need to make to be in compliance are probably minor: tweaking a few bits of copy on paywalls and making sure various automated notifications are working properly. It’s not an incredibly arduous process.
The bad news is that very few publishers appear to be currently compliant. Out of hundreds of sites we reviewed while preparing for a virtual workshop on subscription compliance we’re running later this month, I found just two compliant sites. Two.
Does it really matter? Why should publishers care if they are breaking the law if it’s never enforced? I asked attorney Lisa Dubrow, who specializes in online subscriptions, how much we really should worry about this stuff. She said the problem is that watchdogs are now starting to really look for violations. And, even if a state government or the Feds don’t come after you, the credit card companies just might. To them, merchant accounts processing less than several million dollars a year in subscriptions are the easiest to cut off.
So it’s not prison or fines you have to worry about so much as losing your ability to charge customers using Visa cards … permanently.
Anne Holland is President of Anne Holland Ventures Inc. and Publisher of SubscriptionSiteInsider.com, an online publication dedicated to helping membership and subscription content sites. A 26-year paid content and subscription industry veteran, Anne was the founder of MarketingSherpa and Selling Subscriptions to Internet Content Summits (both sold in 2007). She is obsessed with practical information to turn content into a business and is not interested in hot air, hype or naysayers without hands-on experience.