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.

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

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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.

Why An Affiliate Deleted 13,164 Tweets Today

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affiliate disclosure and tweet deletionI just watched a large Twitter account delete over 13,164 tweets because the account holder didn’t use an affiliate disclosure when promoting others’ products and services in exchange for commissions. The tweet deletes were a c.y.a. move designed to limit legal liability exposure.

That’s a shame because the tweets contained really good content, i.e. he gave out a lot of valuable content in the process of affiliate marketing.

And the sad thing is, he could have fixed the issue for any tweets he wanted to save. It would have taken just one call to an experienced Internet business lawyer to learn how to do it.

Affiliate Disclosure And Material Connections

Since December 1, 2009, Federal Trade Commission (FTC) guidelines have been clear that material connections — including affiliate status — must be disclosed so that the prospective purchaser has the key facts necessary (including your potential bias) in order to make an informed decision whether or not to purchase a recommended product or service.

This covers all of your marketing online and offline to U.S. consumers.

Some online marketers mistakenly believe they only have to comply when promoting on their websites by using the right website legal documents.

That’s not true. Disclosure requirements cover emails, social media (e.g. Twitter, Facebook), etc.

Marketing To The U.S. From Other Countries

What’s interesting is a fellow marketer on Twitter responded to the guy deleting tweets by saying the FTC’s rules and regulations didn’t apply to the marketer because he was based in another country.

That’s another mistaken belief.

If you’re marketing to U.S. consumers from anywhere in the world, the FTC has the ability to go after you for false or deceptive marketing practices.

Does the federal government go after foreigners for bad marketing practices? Absolutely. In fact there have been spammers sent to federal prison for years for violating U.S. law even though they never stepped foot in the United States prior to being arrested in their home countries and extradited to the U.S. to stand trial.

Material Connections Are More Than Just Affiliate Status

And remember, it’s more than affiliate status that needs to be disclosed. It’s all material connections that a prospect should know about.

For example, if you’ve reached an agreement with another marketer to promote to each other’s Twitter followers, Facebook friends, or email lists, that material connection should be disclosed.

Does Your Website Privacy Policy Protect You In Other States And Countries?

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

website privacy policyIn the past, a U.S. business typically needed to be concerned about the laws of the state(s) where it did business (e.g. where the company was set up) and federal law. That’s not the case today if your business is online – with or without a website privacy policy.

For example, California and the European Union may attempt to apply their laws and regulations to your business…even if your company isn’t based in California or Europe. Both have strict privacy laws and regulations that may affect your website’s legal protection.

In fact, the EU adopted an 80+ page data protection regulation that went into effect in 2018. And California has enacted a new law that’s similarly complicated…and it goes into effect in 2020.

In other words, if your site has a website privacy policy that’s a couple years old, chances are you haven’t even addressed these potential threats to your business.

Now, you could ignore these risks. And maybe a government agency won’t come after you. And you won’t get sued by someone claiming you’ve violated their new legal rights.

Of course, the prudent thing to do is have a skilled Internet business attorney review your website for compliance issues and update your site’s privacy policy, terms of use, and other legal documents. As Benjamin Franklin said, an ounce of prevention is worth a pound of cure.