Best Practices for Affiliate Programs!

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Though I am not an expert on affiliate programs, but litigation against some companies that operate affiliate programs, discovery, discussions with the people operating them, and their attorneys have given me some insight.

  • Be open. Legitimate businesses generally do not hide their identities or set up layers of corporate shells.

  • The more you try to hide assets, the more suspicious it looks. Using domain privacy services is not the sign of a legitimate business. Using corporate shells sometimes will provide you some insulation, but eventually fail and make you look more guilty.

    If you look suspicious, people will not report spam to you, but will report it to the FTC, block lists, Visa, or just file lawsuits instead of reporting the spam to you.

     

  • You are responsible for your affiliates. The CAN-SPAM Act imposes liability upon the advertised web sites for the illegal acts of the affiliates. California Business & Professions Code 17529.5, you are strictly liable for your affiliate's misdeeds. (See Hypertouch v. Valueclick, 2011, 192 Cal. App. 4th 805.

  • In United States v. Impulse Media Group, Inc., 2007 U.S. Dist. LEXIS 42230 (W.D. Wash. June 8, 2007) the Court denied a summary judgment motion, because the affiliate program could be a paper tiger because "defendant made minimal efforts to screen potential affiliates or to track and punish those affiliates who were violating its e-mail policy " and "they did not always terminate all of that affiliate's accounts."

     

  • Know your affiliates. Verifying their identities and checking if they are on ROSKO, seeing if the whois information on the web sites that they claim they own match the information on their affiliate application. Confirm that the check/bank information matches the other applicaiton information.

 

  • A strong and enforced anti-spam policy. That includes the following:

    • Terminating and withholding payments from the terminating affiliate, and possibly donate the withheld monies to a charity. If an affiliate knows that it will not if it spams, it may not even sign up.

     

    • Post the identify of spamming affiliates, that had been terminated along with their affiliate identifier so that spam victims can identify the party sending the spam.  This allows spam victims to identify the spammer without involving you.

     

    • Don't have your software hide or obliterate the affiliate identifier. Some affiliate management software will remove the affiliate identifier from the URL. Some will replace it with a session id., but you can always change (or configure) the software leave the affiliate identifier in the URL with the session id. Hiding or encrypting identifying information can impute liability. See In Re: Aimster 334 F3d 643 (7th Circuit 2003).

     

     

    Even if not located in California or the USA, you can still be sued in those locations, because the harm (spam) and advertising is directed to California. Being in Canada did not protect spammer Adam Guerbuez of Montreal from a $873 million dollar judgment.  Also see Gator.com Corp. v. L.L. Bean, Inc., 341 F.3d 1072, 1079 (9th Cir. 2003), Calder v. Jones, (1984) 465 US 783, Snowey v. Harrah's Entertainment (2005) 35 Cal.4th 1054.

    Following best practices not only can protect you from being sued, but may discourage spammers that could get you into trouble from signing up.

    Ask yourself, if someone would use illegal spam to make a profit from your program, would they use fraudulent signups?

 

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