[Kevin]

Please be sure to read this entire piece, as an affiliate, a merchant, or just an interested party.

http://johndozierjr.typepad.com/dozierinternetlaw/2008/05/dozier-intern-2.html


So, the final message is for the State of New York: If the momentum continues, New York affiliate marketers will be shut down entirely. You should have anticipated this consequence. No, you will not increase your tax base significantly. But you have added to your unemployment rates. We need to work together to save the many New York businesses going under.

[Rolet]

Just finished reading it from the email I got from them.....definitely worth the read...

[PetsWarehouse.com]

Nice to see what what a real lawyer has to say on the subject:thumbsup:

[Rexanne]

Please be sure to read this entire piece, as an affiliate, a merchant, or just an interested party.

http://johndozierjr.typepad.com/dozierinternetlaw/2008/05/dozier-intern-2.html

Excellent information.

Thank you for being on top of this issue and keeping it before our eyes, Kevin. It is staggering in its implications and, as this article points out, needs to be taken seriously by the entire industry.

I urge everyone involved in affiliate marketing to read this and remember that your state could be next!

[Vinny O'Hare]

I have met mr Dozier on a couple of occasions and he is always very informed on what is going on.

[Kevin]

Another thing to keep in mind when reading a piece from an attorney on such a broad matter is that this affects more than just our channel. Pay for performance as a whole is under attack, and not every sentence will apply in every situation.

(And thanks Rexanne)

[MichaelColey]

Parts of it are right on, but parts of it make no sense to me. I think maybe there are some major misunderstandings on Dozier's behalf.

1. "making some credit worthiness decisions"? What could this possibly mean? Why would affiliates need credit with a merchant? Affiliates don't pay merchants. Merchants pay affiliates.

2. Establishing a "hold back" from affiliates to cover taxes? HUH? The taxes aren't based on affiliate earnings. And with many merchants, the taxes are HIGHER than the commissions. This is just totally wacked.

3. A "liability reserve" with affiliates? HUH?

4. Concerns over giving an affiliate personally identifiable information? HUH? Why would affiliates need that anyway? We're not the ones who collect or owe the tax.

5. "one [potential solution] is shifting the burden and liability to affiliates"? That's just preposterous! I don't think it's even possible for a merchant to shift their sales tax liability to affiliates, but even if it were that would be an absolutely stupid thing for merchants to do.

[Kevin]

Michael: Some of that supercedes the affiliate relationships as we have them. Let me see if I can find some clarification.

[Kevin]

Well, I went looking for some clarifications, and didn't really get any, aside from restating what I had. Some of this, I'm sure, is having to do with pay for performance relationships outside of the type we are discussing here. There are many scenarios, out side of working through a network for 5% etc where holding back an escrow would be plausible.

The rest is a little beyond me, but I assume is a stop gap measure if you can't roll out the technology to accurately asses NYS sales tax as of 6/1.

I'm sure his post will be updated, but most likely not on a Friday evening.

[AffiliateHound]

Following up from and in total agreement with Michael's comments above:

I find Dozier's analysis disturbing and unsavory. I never heard of him before reading this and know nothing of his practice or of his following, other than by reading his self-serving personal testimonial.

Clearly, he has written this piece from the prospective of an advocate for merchants, and with little regard for affiliates. Michael has summarized many of the statements that clearly demonstrate this, so I won't repeat them here. Suffice it to say that his advice, if followed, could seriously jeopardize merchant-affiliate relations, and if it were to actually be implemented to any significant extent, could have a disastrous effect on affiliate marketing overall. Can you just imagine merchants who would hold back commissions for a sales tax reserve? Or TOS that provide that affiliates would have to indemnity merchants for sales tax liabilities? Or merchants who would not admit affiliates into their programs unless the prospective affiliates passed some subjective test for credit worthiness?

He also indicates that while he doesn't agree with immediate capital punishment of NY affiliates, that all these measures he deems necessary for the merchants' protection be taken against all affiliates, regardless of location.

Equally disturbing is his advice that a major objective for large powerful merchants is to do what he refers to as a "Carve out", as he alleges Google must have achieved from the NY taxing powers. He is saying that large, powerful merchants should consider letting the law stand, but to influence, cajole, intimidate, or bribe, as many officials as they can get close to, to cut them out of the the tax requirement. If Google can do it, so can Merchant X, Y, or Z.

I learned a long time ago that the guys who describe themselves with accolades such as "Super Lawyer" are anything but - they are usually influence peddlers, publicity hounds, and manipulators, whose real interest is running their own business (see all his references to the companies and associations that he has created) and who seldom if ever actually step into a courtroom.

[MichaelColey]

FWIW, I met John at Affiliate Summit and have talked with him via email in the interim (about other matters). He seemed on the ball and I was considering getting some legal work done through him (and still may), but this blog entry sure makes me think twice about that.

[Kevin]

Again, I'm not sure where you guys aren't seeing that there are other kinds of affiliate relationships besides they type YOU have. I specifically wrote you Michael about another type of "affiliate" situation that I lost because of this legislation.

You guys need to get out of the SAS/CJ/LS type "affiliate" scenario when you look at that blog piece as a whole.

Secondly, merchants do need protection too. This issue affects every side of the transaction. Posting information that isn't "affiliate friendly", if you will is allowed here too.

There's going to be lots of things we don't want to hear in the coming weeks and months. I think we need to open our minds a little.

[AffiliateHound]

First, Kevin, let me say that as an affiliate I really appreciate all that you are doing to assist the members here and the industry as a whole in understanding and dealing with these issues.

But I do think that Dozier is posting misguided information that can be devastating to the industry, if followed to any measurable extent.

Again, I'm not sure where you guys aren't seeing that there are other kinds of affiliate relationships besides they type YOU have...
You guys need to get out of the SAS/CJ/LS type "affiliate" scenario when you look at that blog piece as a whole..It seems to me "that" type of affiliate relationship dominates the industry by a wide margin. These other types of relationships that you talk about, as far as I know and have seen described, appear to be few and far between, and thus of less importance to the majority of affiliates, than how this all effects that "standard" SAS/CJ/LS type relationship.

Secondly, merchants do need protection too. This issue affects every side of the transaction. Posting information that isn't "affiliate friendly", if you will is allowed here too.I was merely pointing out the perspective from which I felt Dozier's suggestions were coming, and the further fact that his suggestions were much more than not being "affiliate friendly", but rather were what I would call "Industry Killers". If I average an 8% commission rate for my merchants, and they withhold 8% of the amount of sales as a "hold back" ... to cover any tax liability", I'll be looking for a job the next morning. Clearly, Dozier is not differentiating between special affiliate relationships and the standard SAS/CJ/LS type. If he is providing this type of legal advice to a number of merchants, then this could very well happen.

[simcat]

Some of the generalities in the article I agreed with 100%. But some of the 'guidance' suggestions seemed odd to me, and I can't imagine any kind of affiliate agreement they would apply to. (of course affiliate can apply to lots of relationships, but the law in question refers more to traditional internet affiliate marketing...does'nt it?)

But I expect some merchants may go off on some odd tangents in response to this law, as the affiliate space becomes more of a legal minefield.

Might be a good time to decide to really read closely all your merchants TOS, and legal agreements. Who knows what some of them will try to sneak in. I often just skim over these, might be a big mistake in the future...