Is Sharing Your Netflix Password Illegal?

Category: Video

The U.S. 9th Circuit Court of Appeals ruled in July 2016 that password sharing is a violation of the Computer Fraud and Abuse Act, and punishable as a criminal act. Does that mean that you can go to jail for sharing your Netflix, Hulu, or HBO account with friends and family? Let's take a look at the law, and how streaming media service providers are actually dealing with password sharing...

Sharing Streaming Accounts: Piracy Lite?

Have you ever seen a message like this? "Your Netflix account is in use on another device. Please stop playing on other devices to continue." That may happen if you're oversharing. But how much sharing is too much sharing? And when does it rise to the level of a crime?

Netflix recently announced increases in the monthly fee for subscriptions which allows simultaneous streaming to multiple devices. The "Standard" option ($10.99) allows streaming on two devices, and the "Premium" plan ($13.99) allows four simultaneous streams. The "Basic" plan ($7.99) allows only one stream, and is SD (standard definition) only.

A Goldman Sachs analyst says, “We believe a targeted price change like this is designed to reduce excessive password sharing by incentivizing users to switch to the 1-screen plan,” which costs $3 less per month.

Is Netflix Sharing Illegal?

A Consumer Reports poll found that 46% of Americans have shared their streaming account passwords with someone outside of their home. About 11% of broadband-using households receive Netflix, Amazon Prime, Hulu Plus, or some other streaming services by sharing someone else’s password, according to a study conducted by Parks Associates. That translates into a combined $500 million of lost revenue for all streaming service providers.

College students are the worst moochers, with 20% of 18-24 year-olds admitting they use someone else’s password to get Netflix or other video streaming services for free. Usually, it’s their parents’ account, but students have no problem with sharing passwords among themselves.

Jail Time for Password Sharing?

The Ninth Circuit tried to clarify its ruling on password sharing, but according to the EFF, they only made it more confusing. The bottom line seems to be that sharing passwords for online services is okay as along as the non-owner has "valid authorization" to use the account. But the court did not make clear whether that "authorization" must come from the account owner, or the service provider.

On a practical level, though, Netflix, Hulu, HBO and other streaming media companies have tried to re-assure their customers that they're not going to turn you in to the Feds for sharing your account, but there are some limits to their generosity.

Officially, Netflix’s terms of service warn subscribers, “The Account Owner should not reveal the password to anyone.” But the truth is, they really don't care. In fact, they realize that some reasonable levels of password sharing actually boost their bottom line. “We could crack down on it, but you wouldn’t suddenly turn all those folks to paid users,” Netflix CFO David Wells says. CEO Reed Hastings agrees: “As kids move on in their life, they like to have control of their life, and as they have an income, we see them separately subscribe. It really hasn’t been a problem.”

In Tennessee, however, sharing a streaming service password is a misdemeanor under a "theft-of-services" law that was updated in 2011 to explicitly include “web entertainment services.” Violators face up to a year in jail and up to a $2,500 fine. I can’t find any evidence of prosecutions under this law, and one wonders why the state would have it on the books when the streaming services seems quite capable of managing the situation themselves.

How Much Sharing is Allowed?

Netflix customers have three options. As I mentioned above, there's the 1-screen account which allows no sharing. Two-screen and four-screen options cost a few dollars extra per month, and are supposed to be limited to sharing within a household. But the company doesn't enforce that restriction, nor do they assess any penalties for violators. Amazon Prime limits customers to two devices for simultaneous viewing. HBO GO allows for three, but Hulu Plus has a limit of one viewing device at a time.

Of course, these restrictions only apply to simultaneous viewing. If you share your password with 10 people, and they're all watching at different times, you won't hit any multiple screen limits. And for the most part, the content providers don't seem to have a problem with that, as long as you're becoming addicted to their product. An HBO executive says: “For us it’s more important that at that age where they are not financially independent quite yet, they are habituating to using the product to ultimately aspiring to becoming paid customers.”

“Piracy lite” may be morally wrong and technically illegal in Tennessee, but it’s not very dangerous. Password-sharing is different from the theft and resale of passwords. There is little security risk in sharing a Netflix password with a college-bound child, a significant other, or someone else you know and trust. Streaming services don’t provide opportunities to plant malware on an account holder’s computer or compromise financial accounts.

On the other hand, couples who share streaming accounts while romantically involved often find it difficult to stop after they break up. An article on Slate.com asks, “Do couples need pre-nups for their shared streaming passwords?” It explores several relationships, some bittersweet and some horrifying, in which people continued to share streaming passwords after their relationships ended. Several examples left me shaking my head and mentally urging the account owners to “just change the darned password!”

Netflix, Hulu, and other streaming services are unlikely to crack down on password-sharing in the near future. Even half a billion dollars is a drop in the streaming industry’s bucket, and every freeloader who becomes addicted to streaming media is a potential paying customer when Mom and Dad (or an ex-girlfriend) cut the cord. But Netflix’s recent price changes suggest that password-sharing needs to be reined in, or at least “disincentivized.”

Your thoughts on this topic are welcome. Post your comment or question below...

 
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Most recent comments on "Is Sharing Your Netflix Password Illegal?"

Posted by:

bill
27 Oct 2017

It is illegal. The debate is not how much illegal activity is wrong but how much illegal activity is enough to get you in trouble.

If I am 5 over the speed limit, I am driving illegally. That is not changed by the fact that police in pretty much any state will not give you a ticket for that.


Posted by:

Daniel
27 Oct 2017

I have no legal knowledge, but here's my opinion:

1) Dating couples living together have formed a family unit and should be able to share. If living separately, it is two family units and therefore should not share.

2) College students are a different beast in many financial areas. But as long as the Federal government and private institutions demand the parent(s) be held partially finanically responsible for educational expenses, they are still part of the family unit and should be able to share.

3) A friend/roommate can watch with the Netflix user. However, a college student in room A (whether they are using their family account or their own) should not share their account with anyone in a different room. That's cheating and should be illegal.


Posted by:

olamoree
27 Oct 2017

I avoid those problems by using SolarMovies and such, even tho they also are under legal pressures to maintain the bottom line for the "biggies".


Posted by:

Bill
27 Oct 2017

There should not even be a law about it. That's dumb. It's like saying your wife watching cable in the bedroom is illegal because you're also watching in the Den.


Posted by:

Jay R
27 Oct 2017

I'm so glad that I don't watch TV. But about passwords, I wish someone would hack one of my passwords on sites where I pay bills. Shoot, I'd share those passwords.


Posted by:

carmen
27 Oct 2017

Thanks for the update. I wondered about sharing MLBTV, but didn't find any clear language in their terms. I guess they don't want to scare us off.


Posted by:

Bob
27 Oct 2017

I pay Netflix $3 more so my girlfriend who live across town can use it. We both seldom watch Netflix, but it's there if she wants to watch. So, I guess you can say that Netflix get $3 more from me so she can watch and I think that's fair.


Posted by:

HA
27 Oct 2017

Here's my password - GreenCat4700#
You're welcome.


Posted by:

Paul
27 Oct 2017

The only problem with the cheapest Netflix tier is that is does not stream in HD.


Posted by:

MmeMoxie
28 Oct 2017

Why should anyone have to pay higher prices for family use? I am talking about the immediate family, including those family members off to college. Anyone else, like grandparents, aunts, uncles, cousins they pay for their own or theirs is pay for the immediate family, as a gift.

This to me is simple. When you have cable or satellite service - Your Premium Channels are paid for monthly and is on your monthly bill. This means you can watch on ALL of the TVs in your home and you can download the Demand On or GO apps on your mobile device. Now that can be a lot of sharing but you are allowed it, by your Premium Channel agreement.

I am considering getting Netflix or Amazon Prime Video or Roku Express for my husband. He needs more variety and watched some of what Netflix can do with my daughter's account, who is living with us for now.


Posted by:

Framistat
28 Oct 2017

I have paid Netflix for their top level for 5 years years just to shut them up. I allow my daughter w/4 g-kids to share the account. We have three screens between us. Eventually she may be able to afford her own account, but for the 2 hours a day that I use it, I think Netflix is doing just fine. No guilt.


Posted by:

Charles Eldredge
30 Oct 2017

A friend and I share the costs for Netflix, Hulu, & Sling tv. We share the costs and the passwords. We don't seen to use the same ones at the same time and have never had an issue while viewing. I think our Netflix account is the basic one. But I generally don't watch it much except in spurts sometimes. I think our sling act allows at least 2 simultaneous devices, so that's never am issue. And neither of us usually watch Hulu, so I don't even know if 2 devices can watch simultaneously. If it became a problem we would drop all 3 and each pick the one we watch most...Sling tv.


Posted by:

Krizski
30 Oct 2017

The reason Tennessee made password sharing illegal is simple; tax revenue. The more accounts activated the more taxes collected.


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