Last week, the Business Software Alliance (BSA) announced that it will temporarily increase its rewards incentive from $200,000 to $1 million from July to October 2007. This is the second dramatic increase in the organization’s rewards program which offers financial incentives to anonymous tipsters who report software license violations. In February of 2006, the BSA increased its reward amount from $50,000 to $250,000. Scott & Scott issued a statement in response to the initial increase, and feels obligated to speak out in support of businesses negatively impacted by the reward program.

The BSA’s dramatic reward increase was announced in conjunction with the release of the organization’s new nationwide radio and internet advertising campaign, entitled “Blow the Whistle,” which incites businesses’ employees or former employees to report employers who allegedly run unlicensed software products.

The BSA’s practice of paying reward money to confidential informants raises many questions about the organization’s enforcement practices.

In our experience, business owners targeted by the BSA frequently believe that the person suspected of making the report to the BSA either was responsible for failing to maintain compliance or maliciously installed software without the owner’s knowledge.

In its announcement, the BSA claimed “a ‘million’ excuses will not protect a company caught with unlicensed software.” Scott & Scott believes the software industry, acting through the BSA, is taking a very shortsighted approach to the issue of compliance.

Many companies, particularly the small to mid-sized businesses targeted by BSA, often do not have the resources necessary to invest in costly compliance programs; and the software industry as a whole has failed to do its fair share to reduce the burden of compliance for well-meaning but resource-constrained businesses.

The software industry and its trade groups have not done enough to ease the burden of compliance management on its customers. This leaves the onus of compliance entirely on the customers – the very businesses that the software publishers actively pursue through trade groups such as the BSA.

These facts lead our firm to question whether the Business Software Alliance, an organization created and supported by software publishers to protect the intellectual property of its members, is actually encouraging software piracy by giving disgruntled employees a chance to become a millionaire.