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June 4th, 2008, 12:12 PM #1Retroactive Deactivations
I am wondering about the legality of retroactive deactivations. At least three merchants over the last three days have announced that they are deactivating NY affiliates, retroactive to May 31. How in the world is that legal?
June 4th, 2008, 12:17 PM #2
- Join Date
- August 15th, 2007
The legality of it (IANAL) would strictly be based on the wording of the contract - definitely unethical though - taking away pending commissions.
I think everyone's pretty much in a mess right now about this.
June 4th, 2008, 12:26 PM #3
- Join Date
- January 18th, 2005
I think NYS would have fun with that, and that it isn't legal at all and probably constitutes tax evasion.Deborah Carney
TeamLoxly.com BookGoodies.com ABCsPlus.com
June 4th, 2008, 12:32 PM #4
This raises an issue that I commented on in another thread a few days ago.
There are really 2 separate issues here:
1) How it relates to affiliates. In my opinion, unless the network agreement or merchant TOS provides for it, it would be a breach of contract to take that action and not pay earned commissions. Even if there were a clause in one of these contracts providing for it, it may well be an unenforeceable clause, as it would be near impossible for the merchant to justify a right to void any such commissions.
2) How it relates to the NY Sales Tax Law. The over-riding reason for a merchant to do this, of course, is to avoid the effects of the new law. However, I fail to see how this could insulate them from its effects. My opinion as I discussed before, is that even if a merchant drops its NY affiliates before June 1, but thereafter has even one sale to a NY customer by virtue of a referral from such an affiliate, they are bound by the law to collect and pay taxes (assuming the $10,000 threashold is met) and cannot escape this by any right they exercise to NOT pay the commission, whether by "crumbled" cookies, expired affiliate relationships, contract language, or otherwise.
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