What are the Legal Requirements for an Affiliate Program?

How do you stay on the right side of the law with your affiliate program? Wondering about the legal ins and outs of running an affiliate program? You’re in the right place. In this episode, I will share the essential legal requirements every affiliate program owner needs to know. From compliance to disclosures, I’ll help you to keep your program on the right side of the law.

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What the 2023 FTC Updates Mean for Affiliate Marketing

How to Identify and Stop Affiliate Fraud

How to Write a Review Post that Ranks and Converts

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Previous Episodes of The Affiliate Guy

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What are the Legal Requirements for an Affiliate Program?

How do you stay on the right side of the law with your affiliate program? I mean, how do you make sure you don’t get sued or end up in trouble with the government? If you’ve been wondering about the legal ins and outs of running an affiliate program, you’re in the right place. Today in this episode, I’m going to share the essential legal requirements every affiliate program owner needs to know, from compliance to disclosures and everything in between.

I’m going to help you keep your program on the right side of the law. Let’s get started. So today’s episode, not a super exciting one. We’re not talking about growing 500%. How do you get more affiliates to promote? How do you get different types of affiliates? How do you steal your competitors affiliates? These are the types of things we’ve been talking about recently, right. We’ve been talking about some fun topics.

If you missed the last few episodes, what do affiliate managers do all day? How to communicate bad news. That one wasn’t fun, but still how to triple your webinar sales. But a little bit ago we talked about fraud. A little bit before that, we talked about how to make sure that your affiliate program recovers when things go badly, because things are going to go badly. And today we’re talking about the legal requirements of an affiliate program. How do we stay on the right side of the law? How do we make sure we don’t get sued?

How do we make sure that we don’t end up getting in trouble with government agencies, FTC and whatever. I can’t even think of a single other government agency. All of a sudden they would involve mostly f. FCC. Yeah. I was like, basically it begins in f and ends in c. Okay, that’s, well, not surprising anyway. Yeah, but this isn’t hard. You know, it’s not something that should take up more than 5% of your time, but it’s necessary. Like, you don’t want to mess around here. You got to cover your b***. As somebody who has spent time, as I mentioned before, being sued by the FTC from almost 14 years ago now, they ended up dropping it and we’ll talk about that later.

But like, that’s happened to me. So as somebody who’s been in that situation, this is something you don’t want to mess around with. So you need to listen carefully today it’s not hard. It’s actually really easy to stay on the right side of the law, but you need to know what to do.

Now, quick note, first, everything I’m about to say is us centric. All right. I am an american. Every affiliate program I’ve ever run has been based, actually, except for one. Okay. Actually I’ve run canadian. Okay. So never mind. That’s not true. I think about it. I’ve actually run at least two. One in England, one in one in Canada, two Canadians.

So three outside the US. But most of my experience, I mean I’ve run fully 50, 60 programs. Almost all of them have been in the US. But a lot of what I’m saying is applicable no matter whether you, you know, you’re in the US or you’re overseas.

Because most of what I’m saying is applicable to everyone doing business in the United States. Okay, so if you’re in Ireland, but you’re doing business in the United States, you have one american customer. This applies to you. So that’s 1st.

Second, I am not an attorney and nothing I am saying should be construed as legal advice. Just stuff I have to say. Right. These are based only on my own experiences.

Make sure that your affiliate program has a solid agreement (AKA Terms & Conditions). To make things simple, grab my template here!

I’ve been an affiliate manager for almost 20 years now and I’m gonna do my best to maintain accuracy at the time I’m recording it, you know, in the middle of 2024. What I am saying is accurate to the best of my knowledge. But laws change. Laws vary from state to state.

I’ve only run affiliate programs that were based in like eight states. Most Tennessee, Indiana, California has been a big one. Texas is another one. I know some of those state laws, but I don’t know every state.

I don’t know Wyoming’s laws. No idea. So no guarantee is given regarding the accuracy of anything I say. That said, you should consult the licensed attorney for accurate protection.

Blah, blah, blah, blah, blah. Okay. With all that boring stuff said, I’m going to do my best to get you on the right track here. All right, so what are the legal requirements? What are the legal requirements? What must an affiliate manager do to make sure his or her affiliate program stays on the right side of the law? Everything I’m about to say, these are in no particular order. This is not like the number one thing you must do.

No, you got to do all of these things and you got to do all of these things well. So they’re all number ones. If you’re familiar with the author Tim Grover, he was Michael Jordan’s trainer and Kobe Bryant’s trainer, Dwayne Wade and some others. Everything is number one to him. So in his book is like every chapter, number one, do this. Number two. Number one, do this. Number one.

Number one. I always think that’s fun. All right, so number one, I said, there’s no particular, I just said number one because I was thinking about that. But advertising and marketing laws, you got to stay up on advertising and marketing laws.

First thing you got to pay attention to is email. Email marketing compliance, right? In the US, we have the can spam act. I mean, this, gosh, when that was around, I’d have to Google that 20 years ago, probably.

So one of the things that that requires is that you have consent and an opt out. So you have to make sure your affiliates have permission to send marketing emails. That must include a clear and easy way for. This is from the law for recipients to opt out of future emails.

All right? So that’s the first thing. If they are not abiding by the can Spam act, if they are spamming, you have to remove them as an affiliate, you cannot allow that in your program. If somebody promotes you and you remove them, and then the FTC comes and says, well, your affiliates are swinging, you say, nope, I removed this person and this person, you’re good.

Again, don’t quote me on that, but you should be in the clear. I removed them as soon as I found out about it. And make sure, by the way, you’re documenting these types of things. The second thing is just honesty and subject lines.

Subject lines should accurately reflect the content of the email. Your affiliates cannot make a claim in the subject line that’s not backed up in the content of the email. You gotta have an identifiable sender. I mean, that’s required by every, whether it be convertkit, Aweber, mailchimp, all that stuff.

You gotta have that physical address, right? Overseas in Europe, you’ve got GDPR, right? So you’ve got to have explicit consent. You cannot send marketing emails to people without being explicit that they are signing up for your email list.

And then of course we’ll talk about this a little bit later. But data protection with regard to email, that’s a big one. You gotta protect their personal data, all that stuff. Okay, anti spam, we sort of touched on this.

No unsolicited messages. None that applies to email comments, forums, social media. No unsolicited messages. Some of this is not illegal. Is it illegal for an affiliate to leave a comment on somebody’s Twitter post and say, I like this product, go buy it here? No, it’s a little bit unethical. And so there’s a little bit of a gray area there. It’s not illegal, but you don’t want that in your affiliate program.

And then the second thing, we just talked about respecting opt out requests. So if somebody opts out, even if they don’t do it the proper way, especially if you’ve got people who are a little bit less tech savvy and we get like one person a month who emails our customer support and says, please remove me from your email list. Like there’s a link at the bottom of every email. But again, they’re not super tech savvy.

And so if they’re not removed within a timely manner, you know, 48, 72 business hours, that’s a problem. All right, truth in advertising, this is a big one. Honesty and transparency are key here. Affiliates must make accurate claims.

They have to avoid making false, misleading, exaggerated claims about your products, about your services. I was talking with a client yesterday and I’m hesitant to tell the whole thing just because, again, it might fall into this area. But I’ll see how vague I can make this. I was talking about this product.

It is a supplement. And I was talking about something that this product does not claim that it does. It does not say anywhere on any of the packaging or anything that it will cure this problem. But it has alleviated a lot of this particular problem for my daughter and me, both of us.

All right. It is a side benefit that has been amazing and I feel amazing. And I was telling the founder of this, the client, I was telling him like, here’s what it’s done. Oh, my gosh. And it makes sense. He was like, medically, that makes sense. And I was like, yeah. And of course, I can’t really tell this story anywhere. Yeah, I can tell it privately and I can tell it in vagueness like I just did there. Cause I didn’t make an unsubstantiated claim right now. So we can’t say stuff like that, especially in the supplement where. Why? Because the FTC will crack down on the RB. You said that cure is a disease. Like. No, I did and I said it made my symptoms a lot better.

But you have to be really careful with stuff like that. So statements have to be substantiated. So any claim that an affiliate makes about a product’s benefits or performance has to be backed by evidence. I mean, simply put, if you start taking a supplement and the affiliate can honestly, like, here’s what I weighed on this date.

And what I weighed on this date. That’s a substantiated claim. What you can say is, this product helped me lose 35 pounds. This product helped me clear up eczema. This problem helped me hear better or walk with less pain. You can’t say it’ll help you because you don’t know. You cannot guarantee that this product will help anybody else. So it has to be a substantiated statement.

No deceptive practices like bait and switch. You cannot promise one thing and deliver another. If your affiliates are doing that, that is illegal. You have to remove them. They have to have a clear representation of the product or service, including the price, the feature and availability. So you cannot say, look at this. It’s 50% off. And they go to a page that’s 20% off. Now, can you say it’s 50% off now through Monday, July 17, at midnight Pacific time? And if they go there on the 18th, it’s not 50% off. Absolutely.

That’s not a bait and switch. That’s not a misrepresentation. They put it in the thing when the expiration date is. But that’s why it’s important to make sure your affiliates put, if there are expiration dates on things like that, and it has to be mentioned in the email, in the social media post. All right, speaking of social media, with social media, in terms of, we’re talking about advertising and marketing laws here.

You know, with social media, you have to comply with the platform, whatever the platform’s policy are you, whatever their policies on Facebook, Instagram, TikTok, YouTube, Twitter, whatever, you have to comply with their terms.

You might not like them, but you have to comply with them or else, again, it’s not illegal per se, but you violated Facebook. Terms that could come back on you and your ads could be affected.

And by effective, I mean could be completely shut down, all because of what one affiliate did. That sucks. With regards to, like, endorsements and testimonials, you gotta make sure that things are authentic. You need to, only, your affiliates can only share genuine reviews, genuine testimonials from real customers. They have to disclose.

You know, we’ll talk about this a little bit. If they got free product, if they write a review and it’s paid, that has to be disclosed. If you send me free product and I do a review, I have to mention that I got the product for free and that I will get a commission.

It’s at the very top. Any product review that I ever write, by the way, if you’re an affiliate or you an affiliate manager, you want to teach your affiliates how to write product reviews. I’ll put this link in the show notes. If you go to Matt mcWilliams. com review post, it’ll walk you through how to write a product review that ranks really high on Google and converts into sales. That’s key. But when I do that, any of the ones that I write, I mention if I got the

product for free or I put at the very top, I’m an affiliate and I get paid for this. That doesn’t affect my endorsement. But just letting them know, no fake testimonials, no fake endorsements, that’s going to get you in a ton of trouble.

All right, so the next big thing, and we touched on this a little bit, I’m going to go, is FTC disclosures. Now, like I said, I have been sued by the FTC. I can attest to the gravity of getting sued by the FTC. I vividly remember spending two full days, roughly 20 hours of my life in a conference room with FTC attorneys who barely understood how to use the Internet, let alone anything about marketing.

I mean, again, we spent like, 16, 20 hours together. I remember the transcript. Every time I said pay per click marketing, those doofuses wrote the word pay per clip. Probably shouldn’t call them doofuses. I’m gonna get in trouble. And now they’re whatever. But that’s true.

I mean, it took everything in me not to just laugh. I’m reading this transcript. I’m like, oh, my gosh. But when you’re facing a giant government agency, you kind of have to take these things seriously, right? So anyway, the lawsuit, it was eventually dropped, but it still took up. That wasn’t just those 20 hours.

I spent dozens of hours meeting with our attorney. All these things took, all this effort, legal expenses. I had to drag up hundreds of correspondences with affiliates to show them that I had done nothing wrong.

And they eventually agreed. They at least agreed enough that, like, we don’t have any evidence whatsoever that he did anything wrong, and they dropped the case against me. But that experience highlighted the importance of strict adherence to legal guidelines, because, yes, I had done everything right. But what if I hadn’t? What if I had just gotten a little bit lazy? I remember I had.

Every month I did an audit of 100 of our affiliates. Every month I did that audit of 100 affiliates. Took me 3 hours. It was a real pain in the because I usually did, like, the top It sucked. I didn’t want to do those. What if I had just kind of gotten a little bit lazy?

And so they came in, and they said, well, let’s see what you’ve been doing. And I said, well, I did an audit in March and June, did one in August, and in November of last year. That’s all I did s*** for. Not every month. I probably would have still been sued and might have lost. So that’s the importance of really adhering to this.

I did an entire episode on FTC disclosures recently. I’m going to put that link in the show notes. Let me just share a brief section. So go back and listen to. It’s super important. It’s one of the most critical things you can ever listen to. I’m literally reading from the transcript here. All right.

That highlights the importance of this. I’m going to read this here real quick. Affiliate managers, advertisers, and affiliate programs now bear clear responsibilities.

This is from the FTC. The guidelines specify three main duties first, provide explicit guidance on the rules to your affiliates. Promptly communicate these guidelines via emails or posts in your Facebook groups to keep everyone informed. In other words, going off the script. Here it’s on you to teach your affiliates how to comply with the FTC rules.

If you don’t, you will get in trouble. Secondly, actively monitor compliance like I just talked about. Keep a close eye on your affiliates activities and promptly address any rule violations.

Exactly what I was doing. Third, take appropriate action if non compliance occurs. Ensure you handle any issues according to the guidelines. I’ll just tell you one more again. Go listen to that episode because I share it in detail but document everything. I kept a back then it wasn’t Google Docs, but it was like the Microsoft word online.

And I had this document that just had screenshots like every time I kicked out an affiliate and then they came back and said, why didn’t do that? And I said, yes you did. Here’s the proof. I had every one of those documented. If I found an affiliate was doing something wrong, but it was kind of like a, yeah, hey, you didn’t disclose on this one thing.

I documented that and then they responded back and said, oh, I’m so sorry, I won’t do that. Make that mistake again. Great. But the key is that I documented everything. You’ve got to monitor and you’ve got to enforce. So again, regular audits of affiliate activities to ensure compliance with all the advertising and marketing laws.

You have to be doing those audits. I’m just checking. All right. The next legal requirement is you’ve got to abide by privacy and data protection laws. This is becoming more and more important. It’s in, this is one of those things like the FTC disclosures, things that’s not in the mainstream news.

The email marketing, the spam stuff, that’s not in the mainstream news. Nothing else I’m going to be talking about is in the mainstream news.

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But data and privacy protection is in the mainstream news. This is on like everything, let’s say mainstream news. Like, what I mean is not just, you know, mSN, BC, whatever it’s called, you know, Fox News and CNN.

I just mean people are talking about this thing outside of affiliate marketing. It’s becoming more and more important. So you’ve got to ensure that your affiliate program complies with

data protection laws such as GDPR that we talked about earlier from the EU, the California Consumer Privacy act. In the US, you’ve got to have a clear privacy policy outlining how you collect, use and protect personal data.

You gotta make sure that your affiliates adhere to the data protection standards, especially if they collect any consumer data on your behalf. So simply put, there are things you can and can do and things you must do. So, for example, you have to collect affiliate information. You have to collect their name. You need their contact details, you need their payment information.

You’re storing that information. But if you’re storing that information, you have to abide by the privacy guidelines and the data collection guidelines. And if affiliate says, remove me from your program and delete my information, you have to abide by that. It’s a pain in the b***, but you have to do it. Now, could you reply back to them and say, well, actually, you know, we still owe you some commissions and we want to pay those. Like, I can’t do that if we delete you. So that’s up to you. And they reply back and say, nope, delete me.

Cool. Well, you’re not paying their commissions and that you’ve told them, we’re not paying the commissions. We can’t do it if we delete you from the program and they’re okay with it. So there you go. Make sure that your general privacy policy is up to date, but make sure that you actually, in your affiliate agreement, address this as well. Like, are you going to be sharing their information with other programs? There’s nothing wrong with that if you tell them that you’re going to do it, but make sure that that’s in there.

Make sure that that’s in there, else you’re going to get in a lot of trouble. As far as, like, data processing agreements, DPAs is what they’re called. If you don’t know what that is, you probably don’t need to know this, but I’m gonna tell you anyway. If affiliates are processing any personal data on your behalf, you have to establish a DPA data processing agreement outlining their responsibilities for data protection. Because then if they break that, if they do anything illegal, you say, well, you broke the contract.

You broke the agreement. We’re in the clear. But you need to make sure, and again, audit these things, making sure that affiliates are implementing whatever technical organizational measures that they need to put in place to protect personal data. All right, this is super, super important. Cookie consent.

You’ve seen these since, you know, for the last seven, eight, nine years or so. If you are using affiliates, you are using cookies. of the time, you have to have a cookie consent banner. If you’re not using any cookies, which is really, really rare, I guess you could get away with not having one. But even then, I think you still have to have a cookie policy that says we don’t use cookies.

Again, it’s really rare. I don’t know why you wouldn’t be, but if you’re using affiliates, you are. So you have to tell people who are coming there. Lastly on this, make sure you’re educating your affiliates on data protection requirements.

All the best practices around this stuff. Keep them updated on laws, whether it be FTC laws or data laws, they can get you in trouble, so you need to train them so that you don’t get in trouble. All right, the next legal thing to be aware of is fraud, affiliate fraud.

I did an entire episode on this very recently, actually within the past six, eight weeks. And I will link to that in the show notes. But this is on you, the affiliate manager. This is on you. If your affiliates do wrong, you’re sensing a theme here. It’s your responsibility to catch it. You know, affiliate fraud might seem like this shadow that’s kind of lurking. It’s not as prevalent as you might fear, but as affiliate marketing grows, so does the temptation for fraudulent activities. They’re rare, but when they happen, they hit hard.

I mean, they could destroy your company. And I looked up some statistics before I recorded this. I was curious, you know, since I recorded that episode, if I could find any new stuff, and I mean, the data is all over the place. One source, let me see here from the performance marketing, the PMA, I gotta accept their cookies so I can look this up. Yeah, I mean, they’re, you know, they’re saying up to 10%. I don’t believe it’s that high.

But holy crap, one out of ten. But my experience, the actual frequency of fraud levels is much, much lower. But it’s important to stay vigilant. All right. Again, the rise in affiliate fraud, it is rising proportionally to the increasing attractiveness of affiliate marketing. With each opportunity, every new opportunity that comes along for legit affiliates to make money, there’s an equal chance for the scammers and the fraudsters to exploit the systems. Right. That’s just like anything.

If you double the amount of revenue, typically everybody’s making more money. Right? That’s the same thing with fraud. So again, it’s not huge. The small percentage, though, ultimately comes down to being proactive. The small percentage, it just, it’s such a problem.

Like if it’s a quarter of a percent, it’s still such a huge problem. So you’ve got to be proactive. You know, as I say in the episode, monitoring for affiliate fraud is an ongoing necessity.

So depending upon the size of your program, again, it doesn’t have to be a huge, like, I’m going to spend hours and hours every week. No.

In the episode, I shared a practical way to think about it. Every hundred thousand dollars in sales, you’ll spend about three to five minutes checking for fraud. So again, it scales up as your sales increase.

If you got a million dollars in sales, you’re probably going to spend 30 to 50 minutes a week monitoring the sales. Does that have to be you, the affiliate manager? Probably, yes, for the first few months.

But over time you can outsource that and you can even use AI to do a lot of that. But again, you still want a human element. Just checking. Check periodically, you know, weekly check for most businesses, It’s enough to stay ahead of the fraudsters. And these are going to maintain the integrity of your program.

Not only is it going to save you money, because you’re making sure that when you’re paying commissions, those are genuinely earned, but you’re also going to make sure that you’re staying legal. In that episode, I shared some of the different types of affiliate fraud, some of which are downright illegal and others which are just unethical. Right. I share what indicators to look for, how to catch affiliate fraud.

That’s a big one. How to document it. And we’ve talked about that. Right? This is what you want to make sure that you’re protected legally. So if you tell an affiliate you committed fraud and I’m kicking you out of the program and not paying your commissions, they can’t come back six months later and be like, he never paid my commissions. I’m suing you. No, you’d be like, here’s the documentation that shows that we called 35 of the people you referred and they were all fraudulent.

We have documents on that. So that’s, that’s huge. I talk about how to do that in the episode, also talk about how to prevent it in the first place, which is important, and when to remove an affiliate for fraud and when not to. All right, so again, the link for that is in the show notes. So the next thing you’ve got to consider as far as legal requirements is tax compliance.

Again, I want to be clear. I’m basing this on the US. I don’t know how things are in Belgium or Australia, and I don’t know how they are in every single state. All right, there are 50 different states in the United States alone with 50 different very complex, complicated and way overly complex tax codes that could probably be simplified to, you now, roughly like three lines. But that’s a whole different story. Thing is, affiliate earnings from commissions are considered taxable income and they have to report these taxes.

So if you get an individual that is income tax in my case, you know, all of my stuff is done through our corporation. So that is revenue to the company. And I don’t need a 1099. You know, you don’t need to send me a 1099. But if they are an individual, you have to send, what’s 1099? Mis C for miscellaneous. If you pay them $600 or more than a year or in a year, now, if you have an affiliate network that does that, they handle that.

If you pay through PayPal, they handle that. So most of the time you don’t need to send a 1099, but you might again, if you’re not through a network where you’re paying an individual $600 or more, not through PayPal or some other service where they aggregate the payments. Right. You’ve got to keep records.

All right, keep records. I know for us, very simply, what we do for our stuff and for our clients is we have a Google sheet that about every three months I download into an Excel file and upload that to Dropbox again, just in case, heaven forbid, anything ever happened with Google. Yeah, I might lose two months because I don’t do it every single month. I probably should, but I don’t.

But about every two to three months, I’ll just download the Excel file and upload it to Dropbox. I have a folder in there. So I’ve got two different places where we keep this. We’ve got copies of all of the payments. We have an email copy. Every time we email somebody regarding their payments, then obviously in PayPal, we’ve got a record of that.

But that spreadsheet that just got everybody there. And if I need to know, how much did I pay John Smith in May of I mean, I’ve got a record right there. So any of those, any correspondence related to affiliatepayments, we keep that in a specific folder, even if it’s just as simple as somebody responding back and saying thanks, we keep that in a folder. Why would I do that?

I would say 96% of the emails we send out regarding payments aren’t responded to. Bu t if they say thanks, why would I keep that? Because if that particular affiliate two years from now tries to argue that we never paid them, here’s the email saying that you, I mean, I guess saying thanks would not say that you actually got it, but if they say I got it. Well, you said two years ago you got it.

Not only do I have a record in PayPal or in my bank, but I’ve got a record here of you acknowledging that you received it. So we keep records of all that. If we request, if we send an email that says we need your w nine, we keep records of those emails because then when you complain that you haven’t been paid, hey, here’s the email that we sent you telling you we need your w nine and you haven’t sent it, so we can’t pay you.

The other thing to be aware of is the Nexus and Nexus sales tax laws. So in the US, again, some states have what are known as Nexus laws. So that means if you’re so Amazon, right. Amazon has a nexus in every state because they have a warehouse in every state. So like, I know back in the day when I lived in Nashville and we got the warehouse, the closest warehouse for a long time was in Louisville, Kentucky and then they built one in Nashville and so we got everything like next day and it was so cool. I mean I live in Fort Wayne, Indiana.

I don’t know, the 70th largest city in the US. We have two Amazon warehouses. Two absolutely massive Amazon warehouses. There is nothing that I can’t get practically. I can’t remember the last time I waited more than two days. Most everything I get next day if I order by 04:00 p. m. and so now that they have those, they have a nexus in that state.

In some states they even consider that if you have a certain amount of sales, even if you don’t have a physical presence there, you have a nexus. Having affiliates in certain states can create a nexus.

So you have to collect sales tax. You have to follow the law on this. So if you have a physical product that ships, even if your headquarters is in Salt Lake City and it is shipping from Louisville, okay, if you have one affiliate in the state of Indiana, you have a Nexus in Indiana.

And so in the early days, if you were around back then, back in the early 2008, 2009, 2010, 2011 range, there were programs that, because there were nexus laws in certain states, there were programs that were like, we don’t allow affiliates. New York was one. I feel like Rhode island was a big one, Massachusetts maybe there were like two others really like, no, we’re not going to have a affiliates there. Well then when all the states started having them, they’re like, well I guess we just, you know, we can’t not have an affiliate program.

So you’ve got to do things around that. You’ve got to register for sales tax, sales tax permit in states where you have a nexus. Again, I don’t know what states those are. I know that when we start affiliate programs we’re on a network so we don’t have to worry about that. We just let them handle that. But we have to collect the sales tax.

Where you have a Nexus, you have to comply with the local sales tax rates and the reporting requirements and all that. Again, talk to an accountant if you don’t know about that stuff because it’s different in every state.

I don’t even know what states require them. I don’t know what the sales tax is in any other state. I don’t even know what the sales tax is in my own state. I think it’s 7. 5%, but it could easily be 7 or 8. I don’t know. I just don’t know because I don’t care. So it is what it is, right? International tax compliance, the value added tax, the EU VAT. If you have affiliates in the European Union, you have to be aware of these VAT rules.

So there might be, you know, instances where you do collect it and instances where you don’t. You need to collect the VAT on any sales to EU customers, generally speaking. But again, there could be exceptions to that. And most payment systems, stripe and things like that, they can figure that out, but you have to report that stuff. Again, there’s other, you know, rules for non eu countries.

Some of them are similar to the EU stuff, some of them are similar to Indiana sales tax or Kentucky sales tax, but they’re just different and they’re all over the place. But you have to comply.

The other thing to consider is any cross border payments. All right. Some countries require withholding tax on payments made to foreign affiliates. So you have to determine, do you need to withhold tax on payments to affiliates based in other countries? Again, this is only relevant if you’re in house. If you are on a network, they handle that for you.

So just be aware of, especially if you’re going to have a bunch of international affiliates, you probably should be on a network because you don’t want to be dealing with, you know, there’s things like withholding tax and tax treaties.

You know, like there’s all kinds of tax treaties where we have one treaty with Singapore and another with Japan, and then a different one with the EU. But then within the EU, we have different tax treaties with other countries. And it’s confusing. So there are advantages to working with networks for that reason, just because you don’t have to worry about all that crap.

Again, make sure you’ve got proper documentation in forms w nine s w eight b e n forms. Make sure you obtain their tax identification number, their tin, or their Social Security number, you know, again, it’s all on a w nine or weight. Ben, make sure you’re issuing the right invoices. Make sure you’re keeping these records. I mean, for tax related purposes.

I just say seven years, because I’ve never seen anybody go over seven years. I don’t know of any state or federal jurisdiction that goes over seven years.

Not sure how much to pay your affiliates? Watch my free video tutorial on YouTube that walks you through step-by-step.

Somewhere as low as three. Just keep them for seven. Make sure you have backups of those. So if they send you, I mean, back in the day, they used to fax w nines to send faxes. People would mail me. I haven’t received a w nine in the mail in 810 years, but I used to get them in the mail sometimes, and we would scan them and upload them. So we keep those all in a folder and all of those things. So again, just make sure you’re paying on time, that you’re reporting all of this stuff.

And then the last thing on the tax stuff, make sure you are staying up to date on tax laws. Again, it’s almost irrelevant if you’re on a network, but because they handle that stuff. But, you know, the government likes to change things just for the sake of changing things. So they’re gonna change regulatory things, they’re gonna all those things, right?

And make sure, as I said so many times, make sure you’re talking to an accountant, some sort of professional tax person, to make sure that you’re compliant with these tax laws. It’s a boring thing to talk about, but very necessary.

All right. And the last thing, everything points back to this. It all starts and ends with your affiliate agreement, your terms and conditions, your affiliate programs terms and conditions.

They set the stage for everything we’ve talked about. They need to be comprehensive yet easy to understand. They’ve got to cover everything, but yet not so legal that like an affiliate look at and be like, I don’t know what this is even saying.

So clarity is super important. This is setting the expectations for your affiliates. So they lay out the rules, the rules of engagement, so to speak, right between you, the business owner, the affiliate program manager and your affiliate partners. So you see, clarity is key. If you don’t have solid guidelines, then your affiliates don’t know what’s allowed, what’s not allowed, things like am I allowed to bid on trademark terms, for example, you know, we talked about building trust with your affiliates about 610 episodes ago. This is the trust building foundation. This agreement shows them what to expect, and it said they’re agreeing to it.

So this not only protects them, but it protects you and ensures everyone’s treated fairly. Everything is transparent. They know the rules. You have the framework for an effective partnership. All about win win here in the next episode, I’m going to talk all about this.

All right. It’s all about the affiliate agreement. I’m going to walk you through the exact process that I’ve used to develop terms and conditions for some of the top affiliate programs in the world, such as Shutterfly, Adidas and a bunch of others. And here’s the best part. You don’t need to be a legal expert. You do not need to be a legal expert to basically put together a great terms and conditions.

I’m going to break it down into simple, easy to understand steps to make it easy to create your affiliate programs terms and conditions. So make sure you come back for that. We’ll talk about some of the basic rules and there’s going to be a lot of legal mumbo jumbo, but it’s worth it. We’re going to talk about rules that you need to put in place for your affiliates, how to stay FTC compliant. That part of what we didn’t talk about earlier or touched on earlier is that that’s tied back to your affiliate program agreement. We’re going to talk about domain names and advertising policies and social media reversal policy.

You know, all the FTC stuff, all some of the specific rules for most programs, but they’re not necessarily for all programs. And your pay per click guidelines and trademark bidding and things like that. We’re talking about all that coupons so much more, all the things that you need to cover in your terms and conditions. We’re going to talk about that in the next episode, so make sure you come back for that. Hit subscribe so you don’t miss it. And if you haven’t yet, hit subscribe so you do not miss this episode.

It’s super important. And if you got any questions about this episode, anything we talked about today, the legal stuff, or anything at all affiliate related, you can text me anytime at 260-217-4619 again, all those links are in the show notes, all the ones I talked about in this episode, FTC updates, how to identify and stop affiliate fraud, and how to write a review post that ranks and converts. Those are all in the show notes, so check those out again.

Make sure you hit subscribe so you don’t miss the next episode where we talk about creating that official affiliate program terms and conditions agreement. Whatever you want to call it, hit subscribe so you don’t miss it.

I’ll see you then.