Internet: What Laws And Rules Apply To Affiliate Marketing

If you're planning to start an affiliate marketing business, you may be concerned about the legal ramifications of your undertaking. This is a natural concern. Unfortunately, because Internet commerce is still relatively new, the legal aspects are still in flux. There are some legal issues you should be aware of as an affiliate marketer however.

“Click fraud is a federal crime, a felony punishable by significant fines and jail time. Affiliates should not consider participating in click fraud and should immediately report suspected click fraud to the proper authorities.”

Tax Law

The money you make because of your affiliate marketing business is income and is taxed as such. Be sure to record and pay taxes on all affiliate marketing earnings. In addition, those who make purchases through your websites may be liable for sales tax. This will probably not affect you directly, but you should be aware of it.

Click Fraud

Click fraud is one of the biggest legal concerns affiliates may have. Click fraud is when an entity repeatedly clicks on a certain ad, usually either to benefit the affiliate or to sabotage the merchant. The point is that the clicking is being done under false pretenses, with no intention of purchasing the goods or services offered by the ad. Click fraud is a federal crime, a felony punishable by significant fines and jail time. Affiliates should not consider participating in click fraud and should immediately report suspected click fraud to the proper authorities.

LLCs

Since click fraud can be such a problem, some affiliate marketers may choose to insulate themselves by forming a limited liability corporation. This is a legal business entity that has as one of its primary purposes the ability to offer protection to its shareholders. If the affiliate marketer should be sued, the owners are not personally liable for damages. This way if someone attempts to sabotage the affiliate business by perpetrating click fraud and directing the blame to the affiliate, the affiliate site's owners are protected. 

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Posted in: Affiliate