MLB’s Apple TV+ Arrangement Highlights Subscription Legal Compliance Obligations

Olshan partner Andrew Lustigman, Chair of the firm's Advertising, Marketing, and Promotion's Practice and Co-Chair of the Brand Management & Protection Practice, and associate Morgan Spina published an article on April 21 in Sports Litigation Alert (subscription required) focusing on how services such as MLB's Apple TV+ arrangement must adhere to compliance obligations in a rapidly changing regulatory environment. In their article, they cover the growing trend of subscription services for watching sporting events, how subscription-based business models are scrutinized by state and federal regulators, and how the Federal Trade Commission's (FTC) outdated Negative Option Rule is being revised to fit modern usage of subscription models. “Subscription-based business models continue to be very popular among marketers, particularly given the high cost of customer acquisition,” they write. “[R]egulators have been concerned that businesses’ reliance on consumers taking affirmative acts to cancel automatically renewing contracts, as opposed to consumers affirmatively renewing such contracts, can and has resulted in consumers paying for goods or services that they no longer use or desire.” Regulators' concern has brought forth California’s new automatic renewal law, enforced by the California Automatic Renewal Taskforce (CART), and the FTC’s new proposed rule for the Negative Option Rule. However, they highlight a potential drawback of these efforts, writing, “[T]he Proposed Rule would not supersede state laws as currently drafted. Thus, while the law sets the minimum standards for continuity programs, businesses offering continuous service programs must continue to look to the existing state laws and ensure enhanced compliance where necessary.”