Cliff Banks - The Banks Report

Have You Checked Your Licensing Agreements Recently?

February 27, 2015 — Software piracy is a big problem, and unfortunately, dealerships have unwittingly — or knowingly — contributed to the issue. At least four dealer groups  have paid out nearly $1 million in settlements the last three years for alleged violations. And now, we’ve heard of two more groups — one which reportedly is being told it owes $600 thousand.

The issue of the Business Software Alliance ( auditing of dealerships isn’t a new issue but a reminder is important. And it can be significantly expensive. We’ve just heard of two groups in Texas that are now under fire from the BSA for software piracy.

One of the groups (we’ll refrain from naming them now) has reportedly been told it owes $600 thousand for failure to comply with its software licensing agreements.

If you haven’t heard of the BSA, your IT people probably have. It’s a group backed by leading software vendors (Microsoft, Adobe, AutoDesk, Dell, IBM are some of the members) designed to fight software piracy. BSA defines software piracy as:

“…the unauthorized copying or distribution of copyrighted software, including downloading, sharing, selling, or installing multiple copies of licensed software. Software piracy also includes license infringement – installing a piece of software more times than the license permits – as well as sharing software license codes, uploading software codes to websites so others can download and use it, sharing software license codes or activation keys, as well as user IDs and passwords for web-based software applications. 

BSA conducts audits of companies using software developed by their members. According to the most recent available data, BSA conducted 15,000 audits worldwide in 2012.

Since 2012, dealerships have paid nearly $1 million in settlements with the BSA ranging from $100 thousand to more than $430 thousand. One of those audits included a dealer group in Tennessee that ended up paying $325 thousand. Meanwhile, a California group paid nearly $108 thousand a few years ago. Last year, a group in Pennsylvania settled with BSA for $107.5 thousand while a truck dealership in 2013 settled for $421 thousand.

Those are just the ones BSA for which has issued press releases.

So yes, this is a real issue. According to Helion Technologies, a firm that provides outsourced technology services to more than 650 dealers, a survey they recently completed showed more than 905 of dealerships are out of compliance with their software licensing agreements.

Typically, BSA will learn of potential allegations via disgruntled employees or employees seeking some award money for whistleblowing. The BSA has paid out more than $450 thousand in reward money over the last four years.

Erik Nachbahr, Helion’s founder, has conducted numerous seminars, including one at NADA this past year, regarding BSA audits.

Essentlially, his advice is to conduct self audits of all your software and get compliant immediately where necessary. Document everything and make sure you have the receipts for each piece of software your company has purchased.

And if you happen to receive the letter from the BSA, hire an attorney immediately who has expertise in this matter.




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