When Should You Pay Affiliates Commissions?

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pay affiliates commissionsIf you have an affiliate program for your products and/or services, when should you pay affiliates after a commission has been earned?

It depends on your risk comfort level and the quality of your affiliates.

Affiliate Fraud

Unfortunately, affiliate fraud is a common issue. If you haven’t prescreened affiliate applicants before approving them to join your program, chances are you’re going to have multiple con artists gaming the system to increase their payouts by screwing you over and cheating other affiliates.

Refund Periods Affect When You Pay Affiliates Commissions

So, how do you protect yourself and the integrity of your program?

As a general rule, it makes sense to wait to pay out commissions until after the refund period expires.

Credit Card Fraud And Affiliate Commissions

Even then, you may want to wait longer (e.g. 30 days) beyond the refund period expiration to reduce the chance you get cheated by a credit card fraud scheme.

For example, a con artist affiliate might buy stolen credit card information off the Dark Web and use it to make a bunch of bogus purchases to “earn” affiliate commissions. It might take a while for the victims to realize their credit card info has been stolen and contact their card issuers to request the charges be reversed as fraudulent.

Suddenly you’re getting hit with chargebacks by Visa, MasterCard, etc. after the affiliate has been paid and disappeared. So, you’ve lost the money on the sales plus the affiliate commissions. And you’ll be getting angry emails and phone calls from the victims who believe you’re the one who cheated them (instead of the con artist affiliate).

Where To Get Help

An experienced Internet business lawyer can craft an affiliate program agreement that’s designed to protect you and reduce your risks when you pay affiliates commissions. The attorney can also prepare the right privacy policy, terms of use, and other website legal documents you need to minimize the legal dangers of selling products and services online.

3 Signs Your Website Privacy Policy Needs To Be Updated

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website privacy policy updatesTo protect themselves from lawsuits and government investigations, many business owners have their websites reviewed for legal compliance issues at least once a year by an experienced Internet lawyer. These reviews often result in privacy policy updates to reflect new laws and regulations.

Here are three signs your website’s privacy policy is stale, i.e. it’s not providing you the website legal protection you need.

1. European Union General Data Protection Regulation (GDPR)

If your privacy policy doesn’t address the EU’s GDPR, the policy is probably very outdated. Because the GDPR went into effect back in May 2018. The regulation needs to be addressed if your site has visitors from EU countries…whether or not you do business in the European Union.

2. California Consumer Privacy Act (CCPA)

California’s new privacy law went into effect on January 1, 2020 and started to be enforced on July 1, 2020. If you have California visitors to your website — regardless of where your business is located — you’ll want to make sure your site’s privacy policy either shows how you comply with the CCPA or explains why the CCPA doesn’t apply to your business.

Related Article: Privacy Policy 101: What Every Website Owner Should Know

3. Brazil’s General Data Protection Law (LGDP)

Following in the footsteps of the European Union, the Brazilian Lei Geral de Proteção de Dados Pessoais went into effect in August 2020. If you have website visitors from Brazil, your privacy policy should either address how you’ll comply with the LGDP or why the LGDP doesn’t apply to your business.

IP Blocking Instead of Privacy Policy Updates?

Don’t be tempted to try to circumvent these privacy laws simply by banning visitors from the European Union, California, or Brazil. Even blocking IP addresses won’t prevent someone from accessing your site using a Virtual Private Network (VPN). It’s easier to make privacy policy updates that protect you than to try to evade these laws by blocking Web traffic.

What to Do…

If you need help with privacy policy updates or other website legal documents, the first step is to book a phone consultation with Internet Lawyer Mike Young.

Should You Buy An Online Business’ Equity?

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Should You Buy An Online Business’ EquityWhen you’ve decided to purchase an existing e-commerce business, should you purchase the company’s equity (corporate shares, member equity interests, etc.)? As a general rule, it rarely makes sense to buy an online business’ equity when you’re acquiring it. Most deals are asset purchases instead of buying equity.

Here’s why…

First, with the transfer of equity, you also get the company’s existing and potential liabilities. Even with due diligence prior to closing, you can still end up having bought a pig in a poke…lawsuits, tax judgments, etc.

Second, a seller will often want to retain their entity and some assets unrelated to the sale of the business you’re purchasing. For example, the seller may have an e-commerce venture that’s in a different niche but owned by the same entity…and that won’t be part of your deal. In fact, smart sellers often hide their unrelated online ventures so that buyers don’t even know about them.

Of course, there are rare exceptions to the general rule. For example, if the primary asset of the online venture is the seller’s email lists, it may make sense to buy the entity’s equity instead of the lists themselves. Why? Because email subscribers opted-in to receive messages from one entity…they didn’t give a second entity permission to email them.

Even if an email autoresponder service lets an asset purchaser assume control of the seller’s email lists, chances are the buyer’s sending of emails to the lists violates federal and/or state laws because there was no consent by the recipients. What was perfectly legal for the seller to send becomes unsolicited commercial email (spam) when sent by the buyer.

These are just a few of the issues you’ll want to discuss with your Internet business lawyer as you explore the best way to acquire an e-commerce business. Just don’t assume that you can buy an online business’ equity without there being some significant legal risks that should be minimized as part of structuring the deal.

Email Marketing: How To Avoid Becoming A Mail Chump

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mailchimp email marketingIf you have an email marketing list, you’ll want to protect that asset by regularly making backup copies.

Why is this important? Data loss and deplatforming.

Data Loss

Something can happen to your email autoresponder service. For example, I once had a client who failed to back up his lists. There was a server crash. And he lost a list of 325,000. What had been generating a very nice income for the client was gone in a flash. And under the terms of his agreement with his email service provider, they weren’t liable for his loss.

Deplatforming

email marketing complaintA more recent trend is social justice warriors (SJWs) waging war by deplatforming those they disagree with on any issue. Typically this involves attempts to get the person’s social media accounts (e.g. Twitter and Facebook) banned for allegedly being racist, sexist, transphobic, etc.

The employee activists at these social media companies will often violate their own terms of service to arbitrarily implement a ban based on prejudged guilt because of the SJW’s accusation.

This deplatforming has now spread to email marketing service providers.

For example, yesterday a so-called “woke” individual tweeted a complaint to Mailchimp about a twitter user she accused of being racist, etc.

In response, Mailchimp promptly terminated the accused’s email marketing account.

Whether or not you believe the marketer deserved to have his account terminated because of his beliefs, the moral of the story is that you need to back up your lists because it could happen to you someday. If there’s a lesson to be learned online about disagreements, it’s that popular opinion today on an issue can make you a pariah six months from now.

Email Marketing Precautions

Before you sign up for an autoresponder service, be sure to read the provider’s terms of service so that you understand what the company’s official policy is on the content you send to your lists.

Make sure you have those regular list backups made so that you can port to another autoresponder service if there’s a server data loss or your account is terminated.

And be sure to comply with applicable email marketing laws. I cover many of these legal risks — and how to avoid them — in my book “Email Marketing: How To Protect Your Business When Selling By Email.”

Recommended Email Service Providers

At the present time, I can no longer recommend Mailchimp because of their complicity in deplatforming email marketers based on views.

Many of my clients use either ActiveCampaign or AWeber for their email marketing. I’ve used AWeber for the past dozen years to handle the firm’s lists and I’m an affiliate for the company. I highly recommend AWeber for simplicity and legal compliance reasons.

 

Website Membership Contract: Do You Need One On Your Site?

By | Internet Lawyer, Website Lawyer, Website Legal Documents | No Comments

website membership contractThere’s a lot of confusion as to whether a website membership contract is necessary. Many online businesses mistakenly think that the site’s terms of use (a.k.a. terms of service) provides enough protection when selling online memberships (sometimes referred to as a subscription or continuity program).

Yet, as part of your website legal documents, it’s important to have a separate membership agreement in these instances to protect  intellectual property and other legal rights. A good contract will reduce lawsuits and the likelihood you’ll get into trouble with the FTC or another government agency.

This membership contract spells out exactly what the buyer is getting with the purchase (e.g. a license to use X), what happens when membership ends, and many other important key terms that are unique to the membership itself (as opposed to all website visitors).

In addition, a good online membership agreement will address what will happen if there’s a conflict between the terms and conditions of the agreement and your site’s general terms of use and refund policy.

A skilled Internet business lawyer can draft a custom website membership contract that’s specifically designed to protect you and your venture.