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The European Legal Scene: Challenges, Opportunities in 2017

The European Legal Scene: Challenges, Opportunities in 2017
Stephen Yagielowicz

Europe is at the forefront of evolving legislation targeting the internet, privacy and commerce, and as such serves as a bellwether and compliance challenge for front-line operators everywhere. In hopes of keeping the industry up-to-date on the newest regulatory frameworks sweeping the EU, XBIZ recently asked some of the continent’s most important porn players, “What are the most significant laws and regulations currently impacting your adult entertainment business in Europe?”

Here’s what they had to say:

Currently, internet censorship in the United Kingdom is conducted under a variety of laws, judicial processes, administrative regulations and voluntary arrangements. It is achieved by blocking access to sites and through the use of laws that criminalize publication or possession of certain types of material.

Romanian-based Studio 20 PR manager Andra Chirnogeanu believes “there is no significant impact of new laws and regulations on our activity.”

“We are focused on the glamor niche so nudity is very rare with our models,” Chirnogeanu explains. “We’re very proud to go in this direction and we’re trying to do it with every new model that starts working with us.”

Beyond content-specific restrictions, Europe tends to be more open towards sexuality than some other regions might be.

“We find the laws and regulations in Europe to be less restrictive than in the United States,” Immoral Productions’ CEO Dan Leal told XBIZ. “When we filmed in the U.S. we had permits from L.A. County Health, and Film L.A., and had OSHA inspections. None of these agencies exist in Europe.”

Despite this, other companies have faced greater challenges.

“There have definitely been a couple of law and regulation changes recently that have negatively influenced our business,” Traffic Company’s affiliate manager Wouter Groenewoud told XBIZ. “The thing that usually impacts us the most is whenever we need to change the payment flow (Captcha flow, double click flow etc.), but also small things like having to emphasize rates by putting them in bold text.”

SkyPrivate CMO Andrew notes that in the company’s case, U.S.-based visitors account for the bulk of its service’s users but notes while its European user base is not that large “we are working very hard to be in compliance with the latest EU regulations.”

“For us, there are two regulations that are impacting our business in the EU, mainly data protection and age verification,” Andrew said. “For data protection, we are keeping all the data inside the EU and we don’t sell it to a third party. For age verification, we are employing the latest techniques with KYC and AML for all the users. We have also implemented a couple of age verification tools for U.K. visitors.”

Marc Dorcel CEO Gregory Dorcel said that an inability to broadcast porn in the U.K. and age verification difficulties in Germany has had an impact on development in these two territories.

“Nevertheless we are awaiting from governments more regulation in particular on the web where porn is accessible by any minor,” Dorcel explained. “This situation is very dangerous for our industry and the serious companies who are used to complying with their country’s laws.”

Yens Kramosch, manager for ModelCentro Germany, explained, “Currently, internet censorship in the United Kingdom is conducted under a variety of laws, judicial processes, administrative regulations and voluntary arrangements. It is achieved by blocking access to sites and through the use of laws that criminalize publication or possession of certain types of material.”

Kramosch told XBIZ that in Germany, the Federal Association of Erotic Trademarks is talking about blocking platforms that are providing free porn without any youth protection.

“Previously, they tried to sue the holders and owners of free tube sites,” Kramosch said. “Currently, this association is talking to the Federal Justice Minister and Family Minister of Germany to find a way to create a ban on the websites that don’t provide such a protection for non-adult consumers.”

Kramosch noted that German adult products and content do have different protection tools to filter out non-adult consumers.

“Based on the law, it’s forbidden in Germany to offer websites/access to websites that run without youth protection and adult-only content,” Kramosch added. “Time will tell but there is a high probability that many more countries in the EU will adopt such laws for their own citizens.”

“There are age verification rules that may be applied more stringently in Germany and the U.K., however, if they apply to one they apply to all,” Porndoe Production’s head of business development Yannick Ferreri explained. “The truth is users that want the content will jump through whatever hoops they need to.

“If you look at billing through carriers/operators, then you need to make FSK 16 content, which is content that simply cannot compete with what is offered for free on tubes,” Ferreri revealed. “The products sold through carriers do not match up in UI/UX, so in essence, they do not offer users a true representation of what the adult industry is capable of.”

Stinger, the “make more money manager” for TrafficPartner.com, told XBIZ that a huge topic for a while now is the U.K.’s ongoing plans for an enforcement of age verification for online adult entertainment.

“While more and more details are being shared, for example, with the British Board of Film Classification as a regulator, the real impacts for our industry are uncertain at this point,” Stinger said. “On the other hand, we’ve had a very strict age verification system in Germany since 2004. So, my guess is we’re set up in a pretty solid fashion regarding this issue.”

The issue of mandatory age verification is discussed elsewhere in depth in this issue of XBIZ World and is not the only concern for European companies.

Vendo Services’ CTO Buddy Love says the most significant laws and regulations concern what it means to be a financial technology company.

“Europe has always been skeptical of Visa and MasterCard,” Love told XBIZ. “The region is now introducing a framework that would allow financial technology companies like Vendo to perform many of the functions of Visa and MasterCard. It’s the next step for the Single European Payments Area (SEPA) and it’s part of the PSD2 (short for Payment Services Directive (EU) 2015/2366).”

Love says Vendo is very actively involved in this evolution.

“The revised Payment Services Directive is all set to usher in the era of AISPs (Account Information Service Providers) and PISPs (Payment Initiation Service Providers),” Love explained. “This new scheme will allow payments/transfer of funds between end users and merchants without the involvement of acquirers and credit card schemes.”

Love notes PSD2 will also bring the compulsory implementation of a strong customer authentication for all online transactions above 30 EUR.

“Strong customer authentication will most likely take the form of 3D Secure V2, the standard that is being developed by VISA and MasterCard and will require end users to go through a two-step verification (providing something they are, something they know or something they have) for most of their online transactions,” Love concluded. “We are currently helping our merchants to develop a strategy around these new requirements and make sure they are ahead of the curve. A lack of planning could represent a very negative financial impact, at least with the introduction of these requirements.”

Europe’s legal landscape may be more forgiving than that of some regions, but it is surely in flux in 2017, making an echo of Love’s last statement worthwhile: “A lack of planning could represent a very negative financial impact...” Forewarned is fore-armed.

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